did I miss some subtle passage or description of a passerby that you caught
Yep! I don't have the book in front of me to find the exact passage, but it's there. This is a pretty decent summary I found online:
Brienne (VI) pg 460
"Upon reaching the Quiet Isle, Brienne and her companions are taken up the path to see the Elder Brother. Brienne mentions to the brother guiding them that she is heading for Saltpans to kill the Hound. This takes the man aback, but he tells them to speak to their elder. They see a huge horse in their stables, obviously a war horse, who had mauled two of the brothers. And on a hill, they pass a huge cloaked novice digging graves. The man appears lame, but they cannot see his face (if this isn't Sandor Clegane, I'll eat my hat!). The Elder Brother speaks further of the horrible raid on Saltpans, made worse by the fact that Ser Quincy Cox hid behind his castle walls and did nothing to help the villagers. After dinner, the Elder Brother speaks in private with Brienne. He asks what she seeks in Saltpans, and when she mentions a highborn girl, the elder knows she refers to Sansa.
He lets on that it is the wrong Stark she seeks, for the Hound had captured Arya. Shocked that both of Lady Catelyn's daughters may yet be alive, she is equally surprised when he informs her that Sandor Clegane was dead. The Elder Brother had buried his corpse himself, and left the hound's-head helm on the grave. It was some other outlaw who found and wore it when they raided Saltpans. He goes on to tell her that he took pity on Sandor before he died, and would only say that "he is at rest" when she asks if he were truly dead. The elder remarks that the horse in their stables was the Hound's, Stranger. The Elder Brother then tells her that he was once a knight who fought for Prince Rhaegar at the Trident. He had taken several terrible wounds in the battle, fell in the river, yet awoke upon the shores of the Quiet Isle. "
My take on the Elder Brother's lie is that to him, "Sandor 'the Hound' Clegane" is dead and all of his crimes are behind him, so that he can start over newborn as an acolyte, the same way the Elder Brother did after the battle of the Trident.