What I've been told a few years ago, source unclear at this point--it was related to an incident with my BMW 550i, so please check accuracy and correct me if necessary:

If there is minor damage (they use some percentage calculation IIRC-how, I don't know), no report needed.

If there is more extensive damage, past a certain "point" dealers have to report to buyers.

The salesperson **IMHO** is NOT "being nice" to you. I believe damage is severe enough that he is obligated to report. The way I think about it, if the salesperson tells you something that legally he's not required to, and that may cause you to decline the car, he would get into trouble with the manager.

My vote, and I know it's just me: If you are AT ALL bothered by this mess (and from the emoticons used and the questions you asked, it seems you are, greatly): Turn down this car. I would.