CLOUD STRIFE

Cloud was quite the bitter character. His main problem was an arrogant streak, which became his greatest weakness. He wanted to be part of the gang, but he also felt superior. He was torn by the desire to belong, but also the desire to be the greatest.
Cloud: "I used to think... they were all stupid."
Tifa: "What?"
Cloud: "You were all childish, laughing at every little stupid thing."
Tifa: "But we were children, back then."
Cloud: "...I know. I'm the one that was stupid. I really wanted to play with everyone, but I was never allowed into the group. Then later... I began to think I was different... That I was different from those immature kids."
(Lifestream Sequence)

When he found out he wasn't the greatest, the shame it induced in him made him cut himself off from his family and friends and much readier to believe his memories acquired from Zack were the truth of his life. He didn't exactly lie because he truly believed that it was reality and convinced himself otherwise. His emotions made him have a nervous breakdown before Tifa herself. He eventually found himself and let go of his past to move on to the future.

Cloud:"I left my village looking for glory, but never made it in to SOLDIER... I was so ashamed of being so weak; then I heard this story from my friend Zack... And I created an illusion of myself made up of what I had seen in my life..... And I continued to play the charade as if it were true. I'm physically built like someone in SOLDIER. Hojo's plan to clone Sephiroth wasn't that different. It was just the same procedure they use when creating members of SOLDIER. You see, someone in SOLDIER isn't simply exposed to Mako energy. Their bodies are actually injected with Jenova cells...... For better or for worse, only the strong can enter SOLDIER. It has nothing to do with the Jenova Reunion. But weak people...... like me, get lost in the whole thing. The combination of Jenova cells, Sephiroth's strong will, and my own weaknesses are what created me. Everyone knew that. I'm...... Cloud, the master of my own illusionary world. But I can't remain trapped in an illusion any more...... I'm going to live my life without pretending."
Tifa: "You're sure messed up, Cloud!"

Tifa was a bit confused with Cloud. She was also worried that her memories were messed up. Although she never saw Cloud at the Nibelheim incident, she couldn't fault the fact he knew exactly what happened. Also she remembered growing up with him and was not sure if Cloud was the Cloud she grew up with, one who was made five years ago and given some of "her" Clouds background or that it was the real Cloud and her own recollections of what happened are in error. Just before they descended into the North Cave they were barraged by illusions from Sephiroth where he tells Cloud he was made piece by piece from Jenova cells to be a clone of him. Then shaped using Tifa's memories, Tifa who could never remember what happened after Sephiroth wounded her has no way of knowing if this is not true.

Sephiroth: "Cloud... Don't blame Tifa. The ability to change one's looks, voice, and words, is the power of Jenova. Inside of you, Jenova has merged with Tifa's memories, creating you. Out of Tifa's memory...A boy named Cloud might've just been a part of them."

Again, it is not until the Lifestream sequence that she realises Cloud was at Nibelheim all the time.