It is one thing to take inspiration from another's work for one's own creative writing, but it is entirely another to complete a work first conceived and named in another's fiction. What to make of such fictions within fictions?
One modern incarnation of the debate between nominalism and realism is to be found in philosophical arguments about sets. There are two ways of characterizing a set: intensionally, through description (e.g. the set of all inhabitants of London, to use an example of Russell's), and extensionally, which is just a list of the members of the set.
Borges felt great admiration for Quevedo as a writer, but at a certain point he began to feel suspicion of writers whose genius is purely verbal. Borges begins to elaborate the idea that the particular way in which something is phrased is somewhat arbitrary, and that the important thing is the archetype, the idea itself.