I heard a story about Sai Baba and an "evil eye." What happened with Laxmichand?

The incident you're referring to is a profound demonstration of Sai Baba's omniscience, detailed in Chapter 28 of the Shri Sai Satcharitra. During a Chavadi procession, Baba developed a cough. A devotee named Laxmichand, observing this, had a private, mental thought that perhaps Baba's cough was the result of someone's "evil eye." The very next morning, when Laxmichand was in the masjid, Baba remarked to Madhavrao, "Yesterday I had much coughing; is this the effect of an evil eye?" By perfectly echoing Laxmichand's unvoiced thought, Baba revealed that He is an inner dweller who knows everything. As Chapter 28 explains, this left Laxmichand in awe, confirming his faith that Baba resides in every heart.