Dream was always somewhat naive, but he had never mistaken anyone's emotions before. It was his ability to sense wave lengths like that, so he can read people like a book. He also has a brother called Nightmare, who was corrupted earlier on. It's not that he never sees him, it's that he doesn't know him. He was with the good sans group, his brother with the bad sans group. He has only gets glimpses of emotion from his brother, so he still wonders what he's thinking often.