So in the 358/2 days scene where Naminè is telling Xion that it she returns to Sora then every bit of Xion will disappear. Naminè is gonna erase Xion so does she forget who Xion is halfway through her project? She be all like "what was I just doing?"

well ya Namine should also forget who Xion is, but then knows of her existence because of what Data Namine tells Data Sora, but its also possible that since Namine has power over Sora's memories she may remember who Xion is even if nobody else does.

Namine was not going to erase Xion, and the reason for why she forgot Xion is the same reason for why everyone else did-Xion's being was based on Sora's memories, so when she was killed and those memories returned to Sora's heart, she was forgotten by all who ever knew of her existence.

Edited October 18, 201312 yr by Varnish

Even if she forgot, the point was that she was putting Sora's memories back together, so with all of them free, she would just be able to carry on like nothing ever happened, memories or not.