One of the most wide spread stories about him, is the meeting of Diogenes and Alexander. Is this story actually true ? Or is it just a made up one ? What about others like the one where the sees a prostitutes son throwing a stone at people and telling him "Careful, son. Don't hit your father". There are many more but how do we distinguish the actual ones from made up stories ? If any story is true, how did it spread ? Did someone follow him around and record it ? it passed by word of mouth and someone recorded it ?
Well most of these stories come straight from Diogenes Laertius (180-240 AD, while Diogenes of Sinope died 323 BC), Vitae et sententiae philosophorum. He was an historian and bibliographer, he collected all the facts and tales about every ancient philosopher he knew about for basically his whole life. The most reliable tales are the ones that contain quotations he made from books or other philosophers; even though he used books as he had access to a huge library, it's really hard to find the actual source when he is not quoting someone else. Sometimes he just says "it is said that...". In these cases you can consider that as "gossip". I'd say most of the stories are just legendary, their purpose is to preserve and hand down his thought for posterity. I wouldn't say they are completely false though, but we cannot verify them with certainty because of the lack of reliable and contemporary sources. Anyway I suggest you to read the actual chapter of that book about Diogenes, it is really interesting and fun, also very short. You can find the whole book in Greek and Italian if you google "daphnet Diogene laerzio " and click the "ancient philosophy" link there. Apart from that, the sources about Diogenes are very few and scarce. None of his works ever survived as most of the cynical school of thought.