Your second paragraph contradicts the first one.
It doesn't. Since you didn't really explain how it does, I'll try to elaborate.
The first sentence of the 2nd paragraph is unrelated to the first. It's just saying stuff about guards, not about evildoers.
The second sentence describes a town where people partake in vice, are corrupt as hell, money is their god, they will betray anyone, etc, etc. This town is not "one big happy family", it's full of people who are always looking out for themselves, and when a truly selfless person appears they are even more untrustworthy. If an "evil" character talked to NPC Betrayer Bob, Bob would think that this person could be of use, and possible would try to betray PC after getting the quest done. If a "good" character talk to Bob, Bob would think that the person was being obsequious and luring him into a trap- he wouldn't want to take the chance.
Basically, it describes a messed up town where people are so lacking in decency, that it's easier to trust someone that's blatantly untrustworthy than someone that's apparently trustworthy.