I guess the key might be the word "existence". While it could be construed as meaning he didn't believe they ever existed, you could also say that he meant he didn't believe they still existed, though he knew they once did. It's a poorly written line, in my opinion, because that distinction isn't clear.

yeah the key word is existence- -specifically still existed. you will have to reference all over the PC movie to follow the thread of Dr Cornelius tutorials to Caspian, since they've been distributed at different points and even to different characters. right before Mraz brought Trumpkin to the council he was also accused of using "fairytales" to explain Caspian's disappearance. so at least even the most skeptical Telmarine acknowledges the lore of Narnian creatures, its just that no one believed them to still be alive to prove that they were once real.

the Dancing Lawn scene was a little uneven, although scripting isnt really a problem (except for a few semantics like above). for the most part the script was good here, but the delivery was off, from newbie Ben Barnes to veteran Cornell John. lighting/ filtering was lousy as well, i remembered hardly seeing a thing in the movie theater. overall the Dancing Lawn scene could've been such a centerpiece to rally the first half of the film (like the way the Fellowship was formed in LOTR) but was awkward and didnt quite hit its mark. given that there are several cinematic problems with the scene i would say that the director dropped the ball on this one. it makes me wonder if Adamson even directed this scene because the whole thing felt very amateurish.

This could be another example of the film people not getting Caspian. One of my main problems with the movie is that they didn't capture Caspian's belief that the Narnians existed at least at one time (in the book Dr. Cornelius isn’t sure if they still exist or not). He longed for the old days and wished they would come back. In the movie he seemed more afraid of them than glad to see them. He could mean by that line that he didn’t believe they still existed. I’m pretty sure he did at least to some degree believe they had existed because he said “You’re supposed to be extinct” not “You mean you don’t just exist in stories” or something along those lines. (Sorry if someone has posted something similar. I started my post last night and finished tonight).

Yes, I got the impression that Caspian either didn't believe in the old stories, or that he wasn't very happy that they were true. He came across as just wanting revenge and to be king. And though, near the end, when Aslan asks him if he feels sufficient to be a king, and Caspian answers in the negative, it's not consistent with his character throughout the movie. I thought the whole Dancing Lawn scene was really stupid and poorly done. Just a bunch of creatures (including the horrid looking centaurs) pointing their fingers at him and yelling that he should be killed or something, and then him giving a lousy, Democrat sounding speech.