It's hinted a lot but never actually proved that Murphy wanted Cybil to get to know Mike and take a portion of his cut of the money and give it to Murph. I don't really think that happened though; I think it was Murph just messing with Mike's head in the jail cell.
In the boat, I don't think Mike was referencing that Cybil knew Murph already though. Mike didn't beleive that Murphy kidnapped Jesse and is holding him for ransom... he thought that it could been another scheme for Cybil to get her hands on his money. He was wondering how Murphy found Cybil after Mike split from them when he asks "So what- you and Murph just run into each other?"
Cybil kind of smiles at first at this realization, but then starts crying when she realizes that through her scheming and cons, trying to get the money for herself, that she ends up risking the life of her son. If she never tried to run away, it never would've went that far.
I kind of got off track there, but now that I think about it, Cybil never met Murphy until she tried to launder the money at Jay Peterson's Antique Refurnishing. If she knew Murphy before, then she would have realized immediately that he was not Jay Peterson.
Cybil: "Are you Jay Peterson?"
Murph: "In the flesh"
Plus, he dind't recognize the kid.
So, to answer your question... they did not know each other beforehand.
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Murphy: "Do you recognize me now? Because I recognize you."
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