I take distracted to mean that Sun-Tzu literally didn't know until it was too late. Too many Mask reports coming in and he saw only those relating to the Republic and missed the ones about his own son, along with those about the Capellan March, Andurien and anyone else who bushwacked him over the years.
Like I kept saying, crazy does not mean ineffective, Daoshen has definite capability and skill that his insanity has not hampered. The divinity thing is a double edged sword, it certainly encourages him to make moves others wouldn't because they're too risky, and succeed because others think they're too risky, no one would possibly do them, and not prepare accordingly.
It also means that inevitably he's going to make such a move and his logic will be "I'm divine and cannot fail" at just the wrong moment. Basically it creates a blind spot that must be exploited at some point as a matter of plot.