That doesn’t mean the Merlin knows about Harry and Demonreach, the Merlin wants Harry under surveillance which would show him spending considerable time there, meaning he might guess. Harry has inadvertently become the Merlin’s worst political opponent attracting his ire. None of the three Senior Council members are likely to discuss Demonreach with the Merlin, but he would discuss Harry with them.
Harry knows the true nature of Demonreach and he didn’t care. I am not sure they realise or appreciate Harry knows that Demonreach is Supernatural Supermax and that he has fully realised its resources beyond that of a mere sanctum, nor are they aware of his arsenal. They will see him use two major supernatural artifacts and the full power of Demonreach in Battle Ground, realising both their worst fears and hopes at the same time.