Members of the band later explained (and they may not have known at the time) that a fight had broken out among some members of the audience, and it was the fighters who were being booed.Doesn't make quite as good a story, though.
Nelson had recorded and released his own version of "She Belongs to Me," so he is in fact listing two songs.
Dylan being known at the time for keeping a rather low profile, as did Howard Hughes, Nelson is expressing surprise (and probably pride) that Dylan the recluse came to see the show.
And, of course, before too long, memories were pretty much all Nelson sang, as he devoted his show to his old hits -- and, from all accounts, had a fine time doing as much, though it might have hurt him somewhat thet audiences would rather hear Hello Mary Lou than Fire Breathing Dragon or whatever.
Now, back to "folk" music...