In February this year, Frawley said, perhaps half in jest, that he would re-sign with the club once Paul Roos' future was decided.
Roos announced on Monday he would remain at Melbourne until the end of 2016, but Frawley's contract situation is still up in the air.
Geelong and Gold Coast are two of several clubs that have been linked with the unrestricted free agent.
The Demons coach said too much was being read into an off the cuff comment.
"I think people have taken James' comments a bit too literally," Roos said at AAMI Park on Tuesday.
"I think it was a bit more tongue in cheek and I took it as such.
"It bought him a bit of breathing space, so a lot's been made of that in the last 24 hours [and] I don't think it was as literal as James has said."
Roos' show of faith gives Demons options
Roos also denied Melbourne had spoken with Sydney Swans free agent Nick Malceski.
Malceski – also an unrestricted free agent – has put off contract talks with the Swans until the end of season, with many linking him to a reunion with Roos at the Demons.
"I haven't spoken to him. No one from this club has spoken to him," Roos said.
"There has been absolute no discussion about Malceski in the last eight weeks."
Roos said the Demons were doing their due diligence with the management of their list as the club seeks to make further improvements under his guidance.
The Melbourne coach confirmed the club was chasing high- quality midfielders and a talented key position player to add to the depth of the squad.
"As a four-win club you've got some holes in your team and our players would acknowledge that. We've still got a lot of development in our own list," Roos said.
"Certainly another tall would be fantastic.
"From a needs basis, really high-quality class midfielders [are] still where we need to get better."
Roos said young forward Jesse Hogan – who recently signed a contract extension until the end of 2017 – returned to the training track on Monday as he works his way back from a significant back injury.
The Demons remain hopeful Hogan will play senior football this year.
