The MC was caught with his pants down then because he was seriously lacking in his Memory trait training. Level 4 MC with his now unlocked Memory trait powers could easily fold Shen.
Like hell he could.
The time matters, Shen has been a level 4 for a good while, and Aglaeqwif seems sort of protective of him and she has been around him so chances are she mentored him. Those are some huge advantages, being a level 4 for a long while and being close and guided by your monster parent are huge advantages.
Remember most superhumans who are turned are most of the times by ravaging lunatic of monsters so there's zero chance for interaction or guidance,
Shen being the Spawn of a chosen, and that chosen being one as powerful and, by their standards, ''friendly'' as Aglaeqwif is a huge deal.
Who knows how many secrets and techniques she imparted on him, she doesn't seem like the type to create a spawn for no reason, she did say she loves her children ( biological anyway ) so I really believe she mentors Shen.
Sure Shen seemed more surprised than worried when Mc broke through his dream the first couple of times, but I seriously doubt Shen has ever shown anything close to his full potential. Even Mc notes that Shen exuded ''more aura than Cole ever did'' when they face off sortly before the monster arc.
Not saying Mc wouldn't beat him, he did after all solo Cole whilst they both were level 3s, so clearly the time factor of how long one has had their powers for isn't always a deciding factor for winning ( but it is a advantage nonetheless ), but against Shen it would NOT be an easy win, seriously doubt he would ''easily fold'', big doubt.
And strengthening his memory is good against foes like Shen, sure, but we don't know nearly enough about either memory or dream powers to say for sure which counters which.