The story of Arad's attack on Klal Yisroel is told twice in the Torah*. The first time (Num 21:1) the Hebrew looks like this:
וַיִּשְׁמַ֞ע הַכְּנַעֲנִ֤י מֶֽלֶךְ־עֲרָד֙ יֹשֵׁ֣ב הַנֶּ֔גֶב כִּ֚י בָּ֣א יִשְׂרָאֵ֔ל דֶּ֖רֶךְ הָאֲתָרִ֑ים וַיִּלָּ֙חֶם֙ בְּיִשְׂרָאֵ֔ל וַיִּ֥שְׁבְּ ׀ מִמֶּ֖נּוּ שֶֽׁבִי׃
(My (literal) translation: The Canaanite king (of) Arad, who lived in the Negev, heard that Israel was coming on the Atarim road (and) he went to war with the Israelites and took some captives.)
The second time (Num 33:40) it looks like this:
וַיִּשְׁמַ֗ע הַֽכְּנַעֲנִי֙ מֶ֣לֶךְ עֲרָ֔ד וְהֽוּא־יֹשֵׁ֥ב בַּנֶּ֖גֶב בְּאֶ֣רֶץ כְּנָ֑עַן בְּבֹ֖א בְּנֵ֥י יִשְׂרָאֵֽל׃
(My (literal) translation: The Canaanite king of Arad, who lived in the Negev of Canaan, heard about the coming Israelites.)
At the first mention, Rashi repeats the famous drash from BT Rosh Hashana: What report did [the king] hear? He heard that Araron had died and the Clouds of Glory had departed, and he reasoned that permission has been granted to attack Israel. And the proof text: (the preceding verse Num 20:29) The entire assembly saw that Aaron had died.
As R. Abahu explains (there), the drash is based on a pun. The word for "they saw" (Va'yir'u) can be vowelized as "they appeared" (Va'yay'ro'u) and the word for "that" (kee) also means "because", thus: The entire assembly appeared because Aaron had died.... and the king heard, etc.
The question that should be on everyone's lips, is this: Why is Rashi citing the drash? According to his own mission statement, Rashi doesn't cite random or amusing midrashim. He's not grandpa at the head of the table sharing interesting vortlach. His purpose is to smooth out the Torah text, and he only mentions midrashim that can be used (and sometimes only after being altered) to solve textual anomalies. Here, our text is flawless. We know what the King heard. He heard that Israel was on the Atarim road.
Tosphos asks this question (BT Rosh Hashana 3a) and concludes that the drash actually belongs to the second mention where the reader is not told precisely what the king heard. (i.e. Num 33:40) Rashi, says Tosphos, was sloppy. (v'rashi lo dak b'peirush chumash)
The Gur Aryeh, of course, offers a spirited defense of Rashi. He says that the fact that Israel was on the Atarim road was not enough to provoke an attack; therefore it had to have been something else. Not that I want to go to hell for arguing with the Gur Aryeh but, with all due respect, if the Torah says specifically and in plain Hebew that he attacked because he heard that Israel was on the Atarim Road, who are we to say, "no, no, that couldn't be why he attacked... Had to have been something else."
I understand that Gur Aryeh believes the word Vayishma "and he heard" always, always indicates that something new and exciting was heard, but this is an interpretation that doesn't seem supported by the plain meaning. We're told what the king heard, and if this seems insufficiently new and exciting, well, perhaps the interpretation of Vayishma is what's incorrect. Anyway, Tosphos didn't seem to understand Vayishma the Gur Aryeh's way.
As for me, I wonder if the true solution isn't something simpler. The first mention says "kee bo yisroael"; the parallel says "b'voh yisroel". The difference between the two phrases is one tiny letter (a yud) and the small drop of ink that would convert a beys into a kaf. Perhaps some copyist's hand slipped during the 2000 years between when this was written and the Talmud? If so, there originally was no ambiguity at all about what the King heard.
(And if you doubt such a thing could happen, well, look at Rashi's comment on Num 20:29 where he says flat out that mistakes were made in the transmission of Targum Onkelos. Only about 1200 years elapsed from Onkelos to Rashi. Is it really our position that copyist errors could sneak into every book (including Rashi's very own commentary) ever written aside from the 24 books that make up the Bible? How realistic is that? I know that theologicaly we say that such mistakes were never made, but there is much evidence to the contrary.)