The line between fiction and non-fiction can sometimes get rather blurred.
"Your book would make a great film" is nice to hear. "I know where this happened" is less so, particularly when you invented the story. I've had three different people tell me they know where Brooke's Vale is and where these events happened. Notably, all three set it in different countries.
There seems to be a drive to assume that where a fictional story is engaging or well-researched, it must in fact be true. This also happens with movies - the scriptwriter for Titanic invented the name "Jack Dawson" without knowing about "J. Dawson" who was a crewman on the ship. It hasn't stopped fans leaving flowers on his grave. In a less benevolent case, actor Andrew Robinson received death threats after playing Scorpio in Dirty Harry.
Nowadays, filmmakers can head this off, to a degree. DVD extras showing the cast getting made up, doing interviews and drawing a line between themselves and their character all help. Authors don't have this option, and it can be very difficult to convince people that the ideas and world you have created are both completely fictional. After all, if it is impossible to prove a negative, how do you prove your characters don't exist?
Part of the problem is that people hear what they want to hear. If someone is getting something - validation, enjoyment, etc. - out of what they believe, they won't listen no matter how strong the evidence is against it. Unfortunately, with the increasing social networks and drive for authors to be "in touch" with their readers, it is easier and easier for one person's obsession to spoil things for other readers, and in the worst cases turn dangerous.
In my case the readers who had blurred the line were sensible people who listened when I pointed out the logical issues with their guesses, and accepted it as fictional. Other authors aren't so lucky. Mercedes Lackey's essay "The Last Straw" covers in detail the problems she had with the Diana Tregarde books, and fans who would not accept she invented them.
To make things more complicated there is the issue of reality mirroring fiction. The most notorious case was the novel "Futility, or the wreck of the Titan" which came startlingly close to the actual fate of the Titanic fourteen years later. The problem is that if you research something thoroughly, and you come up with a scenario that could happen in real-life, the world is a big place and somewhere, sooner or later, it probably will.
I've heard people say that they don't understand how anyone could confuse fact and fiction. On one hand I would agree - I've never read a book, fiction or non-fiction where there wasn't an awareness at the back of my mind that this was someone's (often many people's) work, invention or interpretation.
On the other hand, some authors say that they talk to their characters. If the characters are that real to them, then is it surprising that readers may get confused. If fiction is about telling stories that enlighten people about the human condition, telling truth with lies and fables, then believing in that the story is as true as the message can be very easy. And if fiction is about escapism, then it is easy to understand someone for wanting a better life - or maybe just to get away for their own and not let the illusion end?