That saying is recorded in many different narrations. If you read more of them [and I don’t know if you have], you’ll see that Muhammad [peace be upon him] was referring to the intercession he’ll perform on Judgment Day for his followers. It isn’t Judgment Day yet, so he hasn’t interceded yet. He would take prayer requests all the time while he was alive, but he’s no longer alive in the earthly sense.
God is the only one who is As-Sami, the All Hearing. Muhammad is not All-Hearing, thus, he cannot hear prayers (nor can anyone else).