1. The Pope thinks Faustus is a ghost.
Faustus and Mephastophilis have become invisible and they came to the Pope to play tricks on him. They started flinging the dishes around the room and the Pope and his friars got scared and though there is a ghost in the room, which is why he started crossing himself.
2. Faustus tells the Pope to stop crossing himself because the sign of the cross has no effect on Faustus.
Faustus realizes that religion is a fraud, especially when he didn't see God or knows of his existence, whereas the Devil is next to him playing tricks on mortals and taking their souls. He isn't frightened or offended by those symbols - he just knows that they are future and have no effect whatsoever.
