Michael did see the shooters because you see him react and start toward Kay a moment before the bullets start flying.

Theurbanpolitico discussion of possible culprits was thoughtful. I'd say that most people here believe Fredo opened the drapes. Yes, he told Michael that "I swear to God I didn't know it was gonna be a hit." And, Ola may have given him some BS story that they were going to scare Michael or kidnap him, which Fredo accepted because Ola probably promised him that he'd be the head of the family afterward. But, what other "help" could Fredo have given Ola and Roth other than opening the drapes? He wasn't privy to the Cuba discussions or anything else of substance--too busy picking people up at the airport and running Mickey Mouse nightclubs. He did have access to the house, and could have opened the drapes.

Some people here think Rocco may have been the culprit, probably because Michael sent him on that one-way mission to kill Roth. I don't think so.