I would think that the elder knew, and told him about it, along with the one who became elder after her. The people I can agree don't know anything about magic, but could we say it something like a legend for them? They know there are bigger monsters out there from traveler's tales, and they think that they just live in a well protected spot or something :P The elder was one who trusted the legend and told it as fact to Kir-Kon, and simply passed it on to the new elder as tradition demands. Does that work?