when he says, "his own mind full of intrigue, that he should suspect it in others"

When people are trying to make others believe a lie, they notice every single slip they make, and they're sure that others could see them too. They also think that any double entendres they hear are meant to be hints that the other person knows. Mr. Knightley is right.

I think that Frank actually believes that Emma had suspicions that something was going on. I think Jane Fairfax understands that Emma does not know. It's one of the sources of tension around his flirting with Emma.