Xion smiled a bit to try to reassure him that the polite fiction hadn't bothered her. Trying to reassure everyone that he was okay even when he wasn't was just one of those things that made him Sora.

If they had their powers when they went back in time, then it was probably reasonable to assume the other effects would go away, too. So they probably would be able to talk, as well as see something interesting and try to take their minds off a situation they had no control over anyway.

'You wanted to go see real cowboys, right? We could do that, but...' Then she went on to write some of her concerns and that he'd have to let her know if he felt strange.