What does Luke 7:39 mean?
Jesus is at a banquet at the home of a Pharisee. A sinful woman has entered the room to wash Jesus' feet with tears, wipe them with her hair, and anoint them with perfume (Luke 7:36–38). They are possibly still in the town of Nain where, while entering the gates, Jesus raised a dead man to life. In response, the people "glorified God, saying, 'A great prophet has arisen among us!'" (Luke 7:16).The Pharisee has doubts. Pharisees were morally-minded men who diligently tried to follow the Mosaic law. They also followed their own traditional Oral Law, which added extra measures to avoid any violation of Moses' instructions. Pharisees took extra steps to remain ceremonially clean; they avoided contact with anyone who did not. This woman is a sinner, which means she is likely exposing Jesus to ceremonial uncleanness. Simon assumes Jesus does not know this woman's character, so He must not be a prophet. Since Jesus doesn't send the woman away, He must not be concerned for His own cleanness, so He can't be holy—or so Simon thinks.
Simon is guilty of two erroneous assumptions. Both are just as common in modern Christian culture. The first is that those who are disreputable, who have ignored calls for obedience, who have insisted on immorality, are irredeemable. We are likely to assume such people will never respond to Jesus' loving call for repentance. We often focus our thoughts on how much that person "needs to change," rather than on how many reasons they would have to rejoice in Christ's forgiveness.
The second assumption is that shallow reputation is more important than engaging with lost people. Followers of Christ should never carelessly appear to approve of sin, nor engage in it (1 Peter 2:12). Yet it's also crucial not to self-righteously ignore the needs of the lost, in fear others will foolishly judge our image and apparent lack of holiness (1 Corinthians 5:9–10; Mark 2:16–17; John 7:24). Too often, we criticize fellow believers who sincerely engage with sinners when we should be joining them in their efforts.
Of course, Simon is wrong, because Jesus knows who the woman is (Mark 2:8; John 2:25; 4:28–29). He knows she has already repented and God has forgiven her. He knows she is showing gratitude and love in response to that forgiveness (Luke 7:41–47). He also knows Simon needs the same forgiveness.
The Gospels include a few unique occasions where the narrator reveals what others are thinking (Matthew 9:3; Mark 14:4). How do the writers know what they thought? Partly because of Jesus' reaction, but also because the Holy Spirit inspired them. A third option is sometimes missed. Here, it's worth noting that the Gospels rarely give the name of someone who was not either a public figure or a Jesus follower. It's possible Simon repented in response to this teaching and later told Luke his story.