Factor 5 made Rogue Squadron 4. It was called Lair.

 Actually, it's not nearly as bad as it's made out to be.

Maybe he just meant "no" as in "I can't tell who it is and that INCLUDES process of elimination"?

With their experience with rogue squadron, I think its much more feasible that Factor 5 is working on StarFox

Kid Icarus - DO WANT
Factor 5 - DO NOT WANT

It is suspicious, but only slightly. They could have done that with any question simply because they don't want to elaborate on anything beyond that it exists. They probably were about to confirm that they were NOT working on it, but then realized that even that would be too much info, so they declined confirmation.

Also, if you start denying who is working on something, then as soon as you stop declining who is working on something you've pretty much confirmed who is working on something.

So you really can't ever deny someone is working on something if you want to keep a secret.

Wow. Retro AND Factor 5 are working on Kid Icarus? This game is going to be AWESOME. :D

 I thought Retro was working on the 1st person Zelda spin-off. :P

I really don't want Factor 5 to be working on Kid Icarus. They know how to do flying games, and they should stick to those until they actually make one that's perfect (a.k.a, they stop trying to add land-based missions). They don't know how to do anythign involving two legs, though, so they need to stay the hell away from Kid Icarus.  Really, if they were going to work on a Nintendo franchise then Star Fox would make more sense, and Retro would do a much better job with KI on a bad day than F5 could on a good one.

 I'm not worried. If they're working on a Nintendo IP, Miyamoto will pay them a few visits and give them the kick in the ass they need.