The monster carefully watches the cottagers. In chapter 12, he particularly begins to notice pain:
They were not entirely happy. The young man and his companion often went apart, and appeared to weep. I saw no cause for their unhappiness; but I was deeply affected by it. If such lovely creatures were miserable, it was less strange that I, an imperfect and solitary being, should be wretched. Yet why were these gentle beings unhappy? They possessed a delightful house (for such it was in my eyes) and every luxury; they had a fire to warm them when chill, and delicious viands when hungry; they were dressed in excellent clothes; and, still more, they enjoyed one another's company and speech, interchanging each day looks of affection and kindness. What did their tears imply? Did they really express pain? I was at first unable to solve these questions; but perpetual attention and time explained to me many appearances which were at first enigmatic.
I believe in these words, he is doing both of the actions your question asks.
First, he is showing emotion because he is opening himself throughout these chapters telling Victor his story. He is demonstrating vunerability. He also demonstrates a passion to learn. Here, he expresses confusion, a very real emotion.
Second, he is watching or observing and trying to understand why these people would have any reason for sadness. He begins to learn the signs of emotion by watching it play out in others through actions. For example, he finds tears and has cause to wonder when he sees so much in their lives that could be classified as positive. This passage offers great quotes to demonstrate his humanity.