In volume 1, or episode 4, when Higuma the bandit used a smokescreen, shouldn't Shanks's Observation Haki detect where Luffy was? Or was Oda focusing on Devil Fruits more than Haki?
Haki was not really a concept at the time, as the story was never supposed to run this long. The more earlier you go, you see more and more holes in the plot. This is caused by, you guessed it, this being was longer than Oda ever intended it to be. As great as Oda is, he is a human at the end and still makes mistakes.