From the Magic Rules on Saves:
"A creature that successfully saves against a spell that has no obvious physical effects feels a hostile force or a tingle, but cannot deduce the exact nature of the attack. Likewise, if a creature's saving throw succeeds against a targeted spell, you sense that the spell has failed. You do not sense when creatures succeed on saves against effect and area spells."
So:
He knows he was hit by a spell.
He does not know WHAT spell.
He does not know who cast it.
He does not know WHERE the spell was cast (unless he heard the guy casting)
*If its on a person, they get perception to wake up?
It's a normal Sleight-of-Hand vs. Perception check, with a hefty penalty for being asleep.
*If its on a pack animal, does the mule get perception to wake up and bray or bite?
Pack animals do not remain packed while resting, or they wouldn't get much rest. So this eventuality should be moot.
*If its on the ground in a bag, but the ranger has to step over a PC.. um.. acrobatics or stealth to not wake them up?
I'd just decide on a penalty appropriate for the whole route to the prize, and then roll Stealth vs. Perception once.
PC makes save:
*Do they know they were affected by a sleep spell?
No, they know they were targeted by a hostile spell. Knowing what kind of spell it might have been, is a separate Spellcraft check.
*Do they know the rangers location automatically (assume he was hiding behind a bush)?
No, provided the caster didn't have to get out of hiding to catch the target in the spell's Area of Effect.
Okay. Because this npc screams 'ranger' to me, how would things change if he used sleep arrows?
What if, with multishot, two hit at once?
Two seperate saves vs sleep?
Not sure by RAW, but IMO it is only a single save anyway.
1) The first arrow hit. Save against sleep.2) The second arrow hit. If asleep, target wakes up. Save against sleep.
As for the concern about the encounter feeling metagamey/rail roading, I suggest you open up for as much player action as possible.
In short, have them make rolls to wake up, that are managable. If they wake up, have the thief flee the site, possibly taking some damage before he escapes.
Even though the outcome is more or less set to "A thief steals the artifact you were protecting" it can matter a lot that the experience for the player isn't simply "BTW, the artifact was stolen while you slept."
"Slapping or wounding awakens an affected creature, but normal noise does not."
Per RAW I don't think they would get a perception check, but you could have them topple over or the ranger make noise snagging the macguffin so that everyone else gets a check. Then they come out and find the PC on watch has "fallen" asleep. Hijinx ensue.
What level are your player characters? This adversary seems quite powerful for beginning characters. Also just pointing out that a ranger doesn't get access to the sleep spell, so he would need a good UMD and either a scroll or a wand. Either way he wouldn't be doing it stealthily as there are verbal and somantic components. Also the sleep spell has a full round casting time meaning that the npc would begin casting it on his initiative of round 1, but would not complete the casting until his initiative on round 2. All the while verbally casting and waving his hands around in arcane gestures. I would give the pc on watch a good chance to see / hear this.
Also, as well as the ranger not having the spell, neither would a rogue, and neither would they have the ability to 'put' the spell onto an arrow. Only an arcane archer could do that, which would require a minimal level of 7 for the ranger or 9 for the rogue, and that is only if you chose a cheating race with sleep as an arcane spell like ability as part of the race package. That would be a little high for a beginning party, unless they start out at higher levels. Finally the arcane archer would only be able to attach the sleep spell to a single arrow, and would only be able to fire that single arrow and not use manyshot.
I think they are talking about the magic arrow (sleep arrow)
In my mind spells are pretty much always "fought off" unless otherwise noted. Doing so is a positive thing that further invests players in their characters. Not only that, if this were the normal spell with a verbal component I would have the player on watch make a perception check. Here's how I'd run it:
(failed per check) Galahad, you are on the very first watch, noticing how nice the stars in the sky look - how utterly peaceful - and you start to drift off. You yawn and move instinctively into a sleeping position and it's in mid-crouch when your (insert back story element or class features here) training kicks in and you realize with a start something is wrong.
(succeeded per check) Serana, as you stalk the camp quiety on patrol, tuning out the snoring of (another player, good for a few laughs around the table), you hear a low conversation coming from what you consider to be a tertiary ambush zone, the tone low and soft but undecipherable (spellcraft check as possible but not likely unless nat 20 is rolled depending). (roll save, successfully) The tone is calming, melodious and...utterly convincing. You are tired. Why does everyone else get to sleep when you can't? You're envy at the snoring (back to x players character snoring again) turns into white-hot rage, and you start, realizing you were in the grip of something for a mere instant, and you hear the sound of someone moving away into the woods...
There are literally dozens of different ways you can explain it to your players, but the above methods work as story elements and IMO is much better than "you make your save - and you realize some cast a spell on you".
Nothing in the description of the sleep arrow says it is silent, actually several words to me indicate that it is not. So I would give all the sleeping PCs a Perception DC 20 (base 10 + 10 for being asleep) to notice the initial attack. Now if the PC struck with the arrow fails his or her save then that pretty much the end of it until the intruder gets within the camp and then it will be the intruders stealth +10 (for the group being asleep) vs their perception (keep distances in mind as this also effects the DC). Now if the PC makes his save I am sure at that point he will raise the alarm and likely the rest will wake up.
ah but the damage is non-lethal.
Assuming the on-watch PC is put to sleep, the rest of the characters' would get perception checks at -10 for being asleep (vs. stealth of attacker).