What the potential supervisor really wants to know is whether he/she is your first choice. By "first choice", I mean "if we made you a fully funded offer but you also received other fully funded offers, would you accept our offer?". If the answer is yes, then he/she may be significantly more willing to help you write a strong application (not just for the position itself, but also for funding). Having said that, a reasonable supervisor would understand that people may change their mind as more information becomes available or if another place makes a significantly better offer in terms of funding.
Your answer ("Yes, but that's because I don't how admissions work.") is not ideal, but a reasonable supervisor should be understanding of the fact that many applicants do not really know the system very well.
Re:
"I will work with you to write the best competitive statement of purpose"
That is not an offer of a place, but it is a good sign. It means what it says. The prospective supervisor is offering to review your application to his/her institution and give detailed advice on your statement of purpose. This may be very useful, and implies strongly that the prospective supervisor thinks you are a serious candidate. But he/she may be keeping his/her options open in case a stronger candidate applies. Or it may be that decisions on admission are not his/her sole prerogative (the exact process depends on the country and institution).