Yes, that's correct. Harvey Walter's ability applies to all losses (but not costs), as the FAQ explicitly states:
Q: Does the Strong Mind ability (reduce all Sanity loss by 1) of the
professor, Harvey Walters, apply to the casting of spells?
A: No. The professor’s ability works on losses, not costs. The same
distinction applies to the gangster, Michael McGlen, and his ability
to reduce Stamina losses.
So Horror checks, Elder signs, Mythos cards, Tomes... are all covered. While it's a cool combo if you happen to draw that Mythos card, it's not a game-breaker, IMHO. You still have to hang around French Hill Streets, and the reward, while good, isn't exceptional.
I'll note that an alternative way to play this would be to add up all the sanity losses from the Man in Black, and then subtract one from the total. In fact, this is the way I normally play this interaction, since getting the clue and spell for free feels kind of lame. As far as I know, there is no official ruling one way or the other on that though. Whichever way you play it, I don't think it is going to substantively affect your games - there are many more, much more decisive random elements in a typical game of Arkham!