I remember something about Baba coughing and someone thinking it was an 'evil eye'. What's that story?

You are likely thinking of an incident involving the devotee Laxmichand, which is recounted in Chapter 28 of the Shri Sai Satcharitra. During a Chavadi procession one night, Sai Baba developed a cough. Laxmichand, who was present, had a fleeting thought that the cough might be the result of an "evil eye" affecting Baba. This was a purely internal, mental thought. The miracle occurred the following morning when Laxmichand went to the masjid. Baba Himself spoke words that were strikingly similar to Laxmichand's private thought from the previous night, revealing to the devotee that Baba was aware of his innermost mental activity.