Giles - whether they knew each other beforehand or not, I imagine muggleborn wizards who chose to fight would be fairly tight-knit after the war, shared experiences etc. And if Michael had ever made advances, Giles would have very politely turned him down, I'm not syre if he would have said why, it depends how long they've known one another. But yes, Giles is used to rumors about himself, he doesn't mind if they're the wrong rumours - it's ones about being a werewolf that he minds.