Why doesn't the negative "pas" come after "vu" in this sentence
The negation "ne...pas" goes around the auxiliary verb in compound tenses.
why isn't "lui" being used in the sentence construction
Because in "to see someone" (voir quelqu'un), the object of the verb is not indirect. The object of voir (to see) is direct, so the direct object pronoun le is used, instead of the indirect object pronoun lui.
What is wrong with this
what do you mean?