Este es mi amigo Luis. ¿Se conocen?

Este es mi amigo Luis. ¿Se conocen?
 

Rosetta Stone shows 2 men and a young woman. One man is introducing the other man to the woman with the dialog in the title of this post. The young woman replies "No, no nos conocemos.

¿Este es incorrecto, si?

Could it be a question to the young woman,"do you know this man"?

I would say "lo conocen" do you (all) know him?
se conocen means: is he (she, it) known or he (she it)is known.

-Éste es mi amigo Luis ¿Se conocen?
-No, no nos conocemos.

100% correcto en ese contexto.

A tiny little bit too English in structure the first line, but certainly an option in real life.

A more literal translation, in my opinion, of "¿se conocen?" is "do you know each other?" (The full sentence would be "¿ustedes se conocen?" but, of course, ustedes is omitted.)

Then "no, no nos conocemos" means "no, we do not know each other." (The full sentence would be "no, nosotros no nos conocemos" but, of course, nosotros is omitted.)


Extras, if you're interested ...

If I was introducing a friend, however, I would say "¿(vosotros) os conocéis?" ("do you know each other?") (but this is because in Spain we use vosotros instead of ustedes for the improper second person plural).

If, instead, you wanted to say "do you know him/her?" you might say "¿(tú) le conoces?" (improper, singular) or "¿(usted) le conoce?" (proper, singular).

For "do you know them?", you might say "¿(tú) les conoces?" (improper, singular) or "¿(usted) les conoce?" (proper, singular).

Gracias todos. I like the "languagelover" concept of "know each other". It make sense to me that way.
"This is my friend Luis. Do you know each other? addressing both Luis and the girl.