Maybe he was just "moving" instead of sneaking, Dectilon, it would have just taken for him to be leading some non-stealthy troops to make it impossible to sneak around At this point, yes, a Seeking Arrow would have hit him.
No, only "hide" and "stealth", and things like preach/unrest/assassinate. Unless a stealthy unit is doing a spesifically stealthy action, it's just as visible and vulnerable as any other.