There's also one hell of a lot of plausible deniability here - if she hadn't seen chibi Xiu there'd be no way anyone could expect her to believe they'd shared a dream, let alone enjoyed some delicious fruity dream hanky panky.... Even with some weird supernatural shit going on with this pair it's not like it's the first thing anyone would think of after a wet dream...Good question about dirty flirting. Maybe not a serious questionbut while Xu ke is flirting and bothering, she is not harassing with use of power or situation pressure. Rather Xu Ke is trying to make Shenxiu feel less threatened by finding common ground around their recently established mutual interest: Juicy peaches.
Weird progress since they skipped at least a step to get to dirty flirting, but Xu Ke decided magic gex counts as communication, and that there's enough trust that this won't cause issues.
And that kind of justifies the teasing approach, I think - it's not harassment, it's testing the waters to see if her suspicion is correct, in way that avoids having Shen Xiu thinking she's totally weird (which is totally what would happen if she asked outright "did we get down and dirty in shared dream last night?")