Oh, Emma! You are so very clueless. Which reminds me of one of the best film adaptations of Emma ever - the movie, Clueless starring Alicia Silverstone and Paul Rudd in the roles of Emma and Knightley. (Nevermind that their characters were renamed Cher and Josh.)
Emma is not truly listening to Mr Elton, you see. He is not praising Harriet, as Emma thinks. He is praising Emma's influence on Harriet. He is not praising Harriet's beauty as a model, but Emma's skill in drawing - and in that, he joins Harriet in being a complete and total suck-up to Emma, past what's merited. (We're told that Emma has natural talent and skill in art and music, but lacks application, practice and/or follow-through - a theme that will recur, by the way.)
When Emma comments that there are no husbands and wives in the room at present and Mr Elton picks up that phrase and runs with it, she believes in her blind, self-satisfied way that Elton has designs on Harriet. I rather suspect that Elton isn't thinking of Harriet at all.
You have made her too tall, Emma
Enter the rest of the core cast to offer commentary.
Mrs Weston says Emma botched Harriet's eyes and eyebrows, and Elton argues with her.
Mr Knightley, in something that may have double meaning, says that Emma has made Harriet too tall. He means, I suppose, that Emma's scale is off and she has added some vertical height to Harriet in her picture. He may mean as well that Emma has elevated Harriet when she ought not have done. Emma knows that Knightley is correct about Harriet's height being off, but won't own up to it. Elton, however, lies bold-facèdly about it.
Mr Woodhouse frets that the Harriet in the sketch is inadequately bundled up for someone who is depicted as being outside. Silly Mr Woodhouse.
Exit Mr Elton, stage left, with a portrait of Harriet in hand
On learning that the portrait must be framed, Mr Elton begs and pleads and bows and scrapes his way off to London with the piece of artwork. Emma is certain it's because he is terribly in love with its subject, although she notices that he's awfully smarmy -- too smarmy for her taste, really. To which I say again now as I said at the start, "Oh, Emma!"