This is not lying - they don't understand what lying is yet. I guess that he is trying to interact with you just like you are interacting with him about the rocks. As for the poop, my son did not notice that he needed to change if he was very actively playing with other kids (in daycare) - this continued until he was potty trained.
My almost 9 year old still tells me that his stuffed animals talked to him and relays the conversations in great detail. He does not lie, but, he has always liked to pretend play and I go along with it.
