"I was watching some owls, but I didn't see Duo."
Translation:J'observais des hiboux mais je n'ai pas vu Duo.
I don't think that's right, eric. The passé composé (Je n'ai vu pas) is correct because it's a sudden action (really a non-action) that interrupted the ongoing action (j'observais).
This dual use of passé composé tense and imparfait tense is very common. Basically, its how you tell a story in French.