Those affiliated with the Enemy will attribute it to their opposition - but of course, as what else could such a sight be attributed to? - and attempt to search for whatever it is they thought that they spotted for a stir, but given that Diabound is the type of entity that he is, they'll have no luck, and, by extension, will not be able to trace him back to Bakura, though naturally they'll not forget what they saw.

Similarly, the dogs will not react to the metaphysical entity that is Diabound the way that they would a reincarnate, and so he can't be used as a decoy, but they would react to his presence the way animals might stereotypically be imagined to mildly react to a ghost - following his movement with their eyes, hair standing on end, and such.