@Artemis1992, you have a point. I would still vote against telling the whole truth, though. We do not know Xochi's opinion on spirits and it is a potential disaster to our infiltration chances while their delegation is still in the city (can be a long time, seeing as they are overlooked by the Wise Men)
@Metrux, infiltrating the Wise Men has other benefits besides getting boons from Matlal, like having access to a ton of old (maybe even pre-Fall) knowledge. And we better talk to Xochi as soon as we can before she sees all the bloodstains and dead animals on the ground and thinks of an explanation herself.