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Originally Posted by Laserworm
It could be that Kinzo was the one who started both of them, but since Beatrice died he stopped saying that, but Kinzo's wife continued to use the witch story. Therefore that explains why Battler thinks that she told the story.
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Alternately, Kinzo's wife spread the earlier stories of demons on the island and it got mixed up with the Beatrice legend. This has been brought up in ep6, though it hasn't explicitly been stated who was spreading what legend. Still, the island has a history; Battler may not be entirely sure which parts of the legend come from which people.