Actually no, Sara could have seen him, but not the other way around. The flashbacks were hilarious and ridiculous, but I don't think they messed up with the continuity too badly.

Oliver needs someone who has worked with Ra's.

There is also Ray Palmer barricaded in his office stalking Felicity and building his armor, the longest and most boring origin story ever (excluding Gotham, of course).

I would say "The Secret Origin Of Felicity Smoak" and "Draw Back Your Bow" are two of the worst episodes ever for Arrow. But since the last two episodes corrected a lot of the nonsense, I am optimistic for the end of the season (as long as I can pretend that Thea never joined Merlyn).

Their regional manager Dr. Ivo is missing.

Laurel not only doesn't know that Thea killed Sara, but not even that Merlyn is involved at all. Why won't Oliver tell her that at least? Well, EvilLincoln gave a possible explanation last week:

It was a half great, half so-bad-it's-still-great episode.

Walter Steel! Wonder what happened to that guy. He could help Oliver take over the company, but he never showed up to see how his step-daughter was doing after Moira's death…

In honor of Thea's "How could you do this to me" WTF-was-I-thinking reaction in this episode, I feel that I should one last time recap what Merlyn had done before making her kill Sara:

They had a perfect season villain: Ra's. Also a few decent ideas: make Thea a ninja, Sara's murder mystery, Oliver and Merlyn have to team up against the League.

Oh my god, and I almost forgot the scene at Oliver's grave with Thea and her dealer. I lost it when it cut to a sad Olie with his stupid wig. Where was he, how could he even listen to all that without being seen?

But it made sense, because she hadn't yet been retconned into a super hacker genius at the time.

Imagine if we had briefly seen Sara in this episode, on her first mission for the League at Tommy's party.

Bringing back China White as the Big Bad for the flashbacks of season 3 would seem a weird decision… if the rest of season 3 made sense.

"I'm not your daughter anymore, and I never will be again!… Well I'll keep the apartment and the Verdant… and also that bank account… But apart from that, I don't want anything from you!"

No, it was the writers going "fuck the stupid flashbacks!".

WHERE'S MOIRA??

Keeping prisoners locked up would distract them from their true mission: nuking their own cities and kidnapping rich boys.

At last Thea had the "How could you do this to me?!" reaction that makes sense, now I can pretend that she never actually left with Merlyn last year and that Oliver started training her this episode.

Well Oliver doesn't have a job. Since Thea has cut ties with Merlyn, I'm not sure she does either; and they're both homeless.