The Wretch's "ability" is that all characters see them as an Evil Minion, not a Good Outcast. The Enlightened, then, saw the Wretch and the Witch both two spaces away from her and, believing that the Wretch is Evil, claimed that the closes Evil to her is equidistant since the Wretch and the Witch are both two spaces away from her. It's something you have to keep in mind when the Wretch is present, but also, no one can disguise themselves as the Wretch (though the Chancellor can, to my knowledge, turn someone into a Wretch), so if the Wretch is around, it can't be anyone else and can be safely considered by you to be safe even if everyone else thinks they're Evil. This also means that if someone ever claims the Wretch to be Good, they're lying (though I admit that I don't know what an honest Judge's response would be to the Wretch). So far, it can't be corrupted, either, but when the full game comes out, that might change.