He recognized her! Even though she looked like she was underwater because of cry eyes.
And Maglor danced with her, even mimicking the 80's dance moves like a slow, lethargic panda. But with the additional sad, it made him look like one of those kid's with a scarecrow hairdo, dancing at a Cure concert. Which...wow...that'd fit right in, wouldn't it?
Sure, sad panda was still sad, but he didn't care either. He was dancing with Shady the Sun Drop Girl, and that made it all okay.