In School Reunion Sarah Jane exclaims with shock when the she meets the Tenth. Her first words to him were "I thought you had died!" only because he never came back for her. She had met the Fifth in this story. Sarah Jane probably believes that these events are taking place during the Third Doctor's era, thus no sight or sign of the Fourth. The Third does say as much that although he knows what his successor looks like, the change "hasn't happened yet". Sarah doesn't really have a problem with this explanation as she's used to Timey-Wimey Ball by now. She thought that the Fifth Doctor that she only got a brief glance of was another past incarnation before the two that she knew. Since the Fifth didn't really act as though he recognized her, she assumed it's because they hadn't met yet in his own timeline.
In this episode, the Time Lords offer to give the Master a new regeneration cycle. When they finally got around to actually doing it, they weren't working from the Master's then-current incarnation; they had some sort of backup started in this episode that they activated. This also allows them to get the saner earlier incarnations (Delgardo, Ainley, the War Chief if you like that theory) and avoid some of the madness of the Roberts incarnation.
