Practitioners of alchemy would uphold deceptive ideas about it, in order to protect themselves.
I highly doubt that Newton was as silly and foolish as misunderstanding what alchemy is fundamentally about. However supposedly he was found to have mercury in his hair upon being found dead, which certainly discredits the occult and esoteric part of his studies.
The public image of Newton is heavily shaped by the British Government, the whole thing about the Enlightement scientist that society is supposed to emulate and so on. It's quite the rabbit hole to investigate.
There is a whole rabbit hole to explore here: William Newman: “Newton the Alchemist”.
"Newton’s ‘derangement of the intellect’. New light on an old problem, P. E. Spargo and C. A. Pounds, 1979"
And regarding the documented symptoms:
https://royalsocietypublishing.org/doi/10.1098/rsnr.1979.000...
"Mercury poisoning: A probable cause of Isaac Newton's physical and mental ills, L.w. Johnson and M. L. Wolbarsht, 1979"