In fact, this distinction illustrates a major aspect of Christs victory over Satan
The evil seems to be alive and well 2000 years after this "victory". You are drifting off the topic.
Lewis simply meant that a man’s level of honesty comes from his heart. That is, the honest man wants to conform his beliefs with external truth—truth independent of the man.
The presence of evil you describe as “alive and well” doesn’t refute the Biblical prophecy which defines Christ’s victory over Satan as absolute and final. In fact, it corroborates it.