Why didn't Mr. Satan know about Z Warriors and their abilities?
The answer to your question lies in the fact that there was a large time gap between the 23rd and 24th World Martial Arts Tournament.

Also, keeping in mind the fact that no one other than King Furry in DBZ remembers the King Piccolo Saga, it's safe to say that everyone has forgotten about the previous tournaments. This can also be said due to the fact that Tambourine had taken the records of the previous tournaments and the participants, thus there being no written history of them left. 

Therefore, it can be concluded that even if Mr. Satan might have witnessed the tournaments, he has forgotten about them.