I think everyone took it for non-fiction because it said 'non-fiction' on the cover. And has continued to say 'non-fiction' ever since.

How much are three letters and a hyphen worth in sales?

The Salon piece ties together a lot of threads that make it completely obvious that Castaneda turned into a completely generic guru, running the usual scam of destroying everyone else's ego except his own in return for money, narcissistic adoration, and easy sex from women under the age of 30.

The only thing he had going for him is that he did it with more imagination than most.