I think the denial is not in the racism itself, it's in the idea that the racism doesn't have anything to do with them, that it doesn't affect them. As long as they continue to deny that racism is a problem for them too then they will continue to not care. So yeah, they know what it is and that it exists, but...

One thing I've observed is white people only get up off their ass and do something about an issue when they believe it's something that personally affects them and as long as they think racism doesn't they won't care about it. Things literally have to come roost in their backyard before they'll care.