Black Cat translator (but not the Witch Trick translator) chiming in on the "pronunciation" thing, might not have been the best word choice, but the word is 発音, literally like, "emitted sound", and refers both to speech, and the correct pronunciation of that speech.
I did some digging to see what I could find about the supposed story, and it's a bit hard to find a direct source. I found a blog post that made mention of the same thing, and apparently the diplomat was reading aloud a letter addressed to King Felipe. Felipe was apparently surprised by the vertical writing system, while the prince and princess(es?) snickered at the bizarre sound of the language.