I am looking for a general word that describes any situation where you have two people and one person is projecting onto the other their own story, when that story is wrong.
Say Bob is a single guy, and he has a conversation with Sally at the water cooler during work. Joe their coworker sees the conversation, and thinks that Bob is deeply in love with Sally. Bob in this situation, really is not, and the two are being friendly with each other. Joe confronts Bob later, and Bob says he is not interested, but Joe does not believe him, Joe continues to not believe Bob and projects that story onto Bobs life.
Another example could be when you are telling the truth about something to your friends, and no one believes you, because they have made up their mind based on some piece of evidence that is taken out of context.