Regarding Lan Xuanyu, he actually didn't understand much about him. The reason was simple: Shrek Academy had sealed off Xuanyu's information very tightly, so tightly that even the War God Hall couldn't dig up much.
But Yu Muchen was extremely shrewd. Just from the fact that Elder Yi personally made an appearance to support Lan Xuanyu and another True God-level powerhouse showed up to take him away, one could see how important Xuanyu was to Shrek Academy. Given the importance Shrek Academy attached to him, it would be odd if he weren't talented, so, he seized the opportunity to extend an invitation.
