The controversy over the purported US bomb threat was unleashed by Mr Musharraf in an interview with CBS television show 60 Minutes, due to be broadcast this weekend.
The Pakistani leader said former deputy US Secretary of State Richard Armitage in 2001 told Pakistan's intelligence director to cooperate with Washington in the wake of the September 11 attacks or "be prepared to be bombed. Be prepared to go back to the Stone Age."
"I think it was a very rude remark," he told CBS.
Mr Armitage, admitted using harsh language but said in a television interview "never did I threaten to use any military force."
President Bush said he had just learned of the allegation in a newspaper and was "taken aback by the harshness of the
words."
"I don't know of any conversation that was reported in the
newspaper like that," he said.
Book deal protected
However following talks at the White House, Mr Musharraf refused to disclose more detail about the conversation, citing responsibilities to publishers over his upcoming book launch.
"I am launching my book on the 25th, and I am honour-bound to
Simon and Schuster not to comment on the book before that day," he said, sparking incredulous laughter among reporters and relieved chuckling from the US President.
"In other words, 'buy the book' is what he's saying," joked Mr Bush
Terror treaty lauded
Despite the bombing controversy Mr Bush praised Mr Musharraf’s anti-terror credentials, pointed out al-Qaeda had tried to assassinate him several times.
"He has been a strong, forceful leader; he has become a target
of those who can't stand the thought of moderation prevailing. I
admire your leadership," Bush said.
Mr Musharraf assured Mr Bush that a peace treaty with tribal elders near the Afghan border would not take pressure off Afghanistan's Islamist Taliban militia or their terrorist allies.
However Mr Bush refused to say whether he would seek Pakistan's permission to strike inside the country at Osama bin Laden and al-Qaeda.
Later Mr Musharraf later told university students Pakistan had joined the war on terror not really for the world as much as for themselves.
"It happens to be in the interest of the whole world, so we are
together," he said.
"I am saying this because there is always a feeling, aspersions being cast in the media, (that) we are not doing enough, we need to do more."