If it's part of the suprise round, then of course they're "unprepared". But if they've been fighting for a few rounds, then they're as prepared as they're ever going to be. As long as the rogue doesn't have flanking, or any number of other reasons that will deny the other guy's Dex to AC, he won't get sneak attack.IMO, "surprised" refers to a state of not being prepared, even more so than being merely flat-footed. I like to encourage scouting/good tactics on the PC's part. An enemy rushing from hidden ambush with a melee attack technically becomes visible the moment she leaves cover/concealment. I'd judge it a surprise round, however.
Gaiden:
Yeah. What Hyp said.

If I wanted to hate rogues, I'd enforce 2e Backstab rules. Heh.What is it with members of this board trying to hose rogues?