Essentially, everyone in the region knows of Morrigan Aensland because of her travels and paths of destruction she left behind. Her enemies, Talim, the Kusanagis and others know about her as well. Even residents of Wimbourne know of her trickery and allure.
However, it was assumed that Morrigan died of sickness after she purchased her lavish castle observing the market city. When Rin Aensland began making her rounds with her children, the locals assumed she was the sister that Morrigan referred to (when she was really speaking of Lilith). Many thought she inherited in Morrigan’s will, a popular rumor amongst the townspeople. A few actually think Rin IS Morrigan and that the once treacherous succubus gained a large amount of weight.
…No one outside of the estate knows that Morrigan is still alive deep in Rin’s sex dungeons.
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