I have heard of the same rumor, but surely is a mistake. After all Dylan was not a proper album, but left overs, mainly from Self portrait, that Columbia released in order to cash in, when Bob signed to a different label.
Jerry Wexler in his biography, claims that he had just finished recording Communique, when Dylan came with the new songs (Slow train...) and Wexler had MK on his mind as the most fitting player for the new material.( It doesn't actually say when and how he suggested MK to Dylan but it is the easiest thing to understand that he implies. It is also funny, but he mentions asking MK to play like Albert King and not MK!).(Rhythm and the blues pages 290-292)
I also have read the other version, that Dylan heard MK's guitar sound for the first time in 1978 at a concert and suggested him to Wexler. Which ever is the case, it is quite obvious that the first MK encounter with mighty Bob took place no earlier than 1978.
But such mistakes do happen, when journalists (or at the press) make mistakes and then someone recycles them, without checking them out from the source. I have read from a magazine that MK plays at J.J.Cale's album 8, and we all know that is not true. Or is it?
