I'm not entirely sure that we're still disagreeing. I'm not claiming that fiction is the same as non-fictional entities. I'm saying that something functioning in the human world has to have a category called "fiction", and to correctly see the contours of that category.

This gets back to the themes of the chinese room. The worry is that if you naively dump a dictionary or encyclopedia into an AI, it won't have real semantics, because of lack of grounding, even though it can correctly answer questions, in the way you and I can about Santa.

Yes, just like the point I made on the weakness of the Turing test. The problem is that it uses verbal skills as a test, which means it's only testing verbal skills.

However, if the chinese room walked around in the world, interacted with objects, and basically demonstrated human-level (or higher) lever of prediction, manipulation, and such, AND it operated by manipulating symbols and models, then I'd conclude that those actions demonstrate the symbols and models were grounded. Would you disagree?