Nomamoto's casual attempted murder being brushed off and played for laughs is kind of undercutting the rest of this chapter, unless it's foreshadowing for Lily♪'s improbably continued survival.
There's something really funny about Condemned Sinner being a nondrinker, since he's currently wearing the face of one of the most notorious drunkards in japanese mythology/history. Shuten's probably making his unlife hell for not indulging.
I think it's less that he doesn't recognize her and more that he's in a bit of mental turbulence and "oh hey it's that witch lady, nice to see you" is less prominent in his head than "good lord what is happening, who am I, what am I"