I think Tarkin knows Palps is a Sith lord. When he says, "You, my friend, are all that's left of that ancient religion" - I consider him to be using the collective you, meaning Vader and Palps both. Also, considering how powerful Vader is, wouldn't it be reasonable to assume (if you worked for the empire) that Palps must be more powerful than Vader? Why would Vader, with all his abilities, play second fiddle to some ordinary man?