Answer
Krishna is indeed present in His holy name, even when it is uttered by a non-devotee.
However, when the chanter possesses an offensive or impersonal (Mayavadi) consciousness, that consciousness accompanies the vibration. The hearer receives both the holy name and the contaminating influence of the speaker's offensive mentality.
This is compared to milk touched by the lips of a serpent. The milk remains milk, but it has become poisonous. When someone drinks it, he cannot separate the poison from the milk; both enter together.
For this reason, devotees are advised not to hear Krishna-katha or the holy name from Mayavadis or offensive speakers.
A further question was asked whether such speakers are simultaneously purified by chanting.
The answer was that this is not necessarily so. Because they are committing offenses to the holy name, they may not receive the purifying effect. Their offensive mentality blocks the benefit, just as drinking poison harms the person despite the milk being present.
Ultimately, because the Lord is a person, He reserves the right to reveal Himself or withhold His mercy. His appearance in the holy name is not a mechanical process governed by fixed rules.
Those whose Mayavada understanding is only superficial may gradually become purified by chanting. But those who are deeply convinced that the Absolute Truth is ultimately impersonal have a much stronger obstacle to overcome. Most ordinary Hindus do not actually understand Mayavada philosophy in its technical sense. When they say "all are one," they usually mean that there is one supreme power appearing in many forms.
Vaishnava philosophy also teaches that everything originates from one Supreme Person. The difference is that the Supreme Person always remains an eternal individual.
Mayavadis teach that everything has emerged from the Absolute because the Absolute has transformed into the universe and lost its personal identity.
Vaishnavas teach that everything emanates from Krishna, yet Krishna eternally remains the complete Supreme Person.
This distinction makes it relatively easy to explain Krishna consciousness to ordinary Hindus because many of them simply lack philosophical clarity rather than being committed Mayavadis.
Vaishnavas also believe that personalities such as Ganesha, Brahma, Indra, Chandra, and Varuna are real individuals occupying exalted posts within the universe. They reside on their own planets and continue to exist as distinct persons.
These positions are eternal, but the individual souls occupying those posts may change from one lifetime to another.
Lord Vishnu, however, is entirely different. He never accepts a material body. His transcendental form is eternal and identical with Himself.
Unlike conditioned souls, who accept and give up material bodies, Vishnu's body and His self are one. There is no distinction between His form and His identity.
Even Shankaracharya acknowledges that Vishnu is beyond material nature and beyond the unmanifest material energy (pradhana). Vishnu's form is therefore fully transcendental.
Mayavadis explain Krishna's appearance by saying that He accepted a body made of maya or sattva. Vaishnavas reject this conclusion and affirm that Krishna's eternal transcendental body is identical with His very self and is never material.