It do not! She talks about him to Pete and Pete asks Elliot to go find him. It'd be forgetting about him if he never showed up. The snake oil salesman was there to give the Gogan's a way to be a more credible threat to Pete's safety. He wanted the dragon, they wanted Pete. They was terrible jokes that he had every right to be afraid of, but once they was out of the swamp and Pete was in Passamaquoddy, they had no way of really tracking him down or catching him without outside help. He was given motivation to support their actions.

[Better than arguing about their hair.]

If you're tellin' me Pete's Dragon's bad cause of it's plot, you don't go tellin' me to watch another one that ain't got one! It don't make no sense.