Klaus looked at the lady as if she was a moron. He was obviously riling her up, but she couldn't see it because she was clouded by anger.
This was one of Klaus' greatest abilities, making his opponents lose control while battling. He didn't want the battle to last for a prolonged time. As much as he wanted to enjoy the battle, he didn't want a scenario whereby more Gnomes would be drawn over and they would have to run with their tails between their legs. They are the ones who should chase people away, not the other way around.
Grey was pleased internally, but his expression changed softly, the reason for this was because only the lady brought out her puppet. If the others didn't bring out theirs as well, it would be difficult to take them all out at the same time. At the moment, if any of them tried to escape, the chances of that happening were pretty high. They had more people, so as long so they went different ways, it would be impossible to keep all of them here.