Questions left unaswered (spoilers too)

Nothing would have persuaded Sean so convincingly as the murder of the wife & kid. People lie to him all the time to try and escape from prison or to kill him. It needed something special to convince Sean to trust the man he had hunted for 7 years. Especially because Memo had an obvious motive for trying to kill Sean &/or his wife (Sean had no way of knowing which of them was the intended target) whereas the guy trying to take over Memo's trade had no reason to punish Sean.

The con worked on many levels. Most obviously few people would be cynical enough to think Memo was behind it (hence your question). But psychologically Sean was completely draw in. He felt a certain empathy with his enemy; he also wanted to believe that Memo could understand what Sean was feeling in a way that none of his colleagues (however well meaning) had been able to).

The scene at the end shows Memo didnt seem too upset about the loss of his wife. As for his son, take your pick:
a) he didnt really die; the accompolice faked it solely for the benefit of the surveillance/bugging operations;
b) Memo had previously discovered that the kid wasnt his;
c) he was just so selfish and ruthless that Memo was willing for other people to make any sacrifice to secure Memo's freedom.

All good questions, each may be answered with personal observation, experience, or intuition.

From the clear intent of the movie, that we are not to know who Diablo is, Diablo knew who Sean was and where he lived because there is very little information that cannot be obtained with the right amount of money given to the right corrupt individual. On the DVD, there is a deleted scene that shows one of the Mexican officers seen earlier has been bought by El Diablo, so he could have easily had given the name of one of the lead officers. "Diablo" may have done this to send a messege to those that may pursue hm, and Memo did it becuase he faced Sean, and wanted vengence against that face.

You do see Sean get shot under the sheets, but with the adreneline that comes with his short temper in that situation, you can't feel pain as much, especially where he was hit and that it seemed to go straight through. The first fight I was in, ended up on the groud, with me holding the guy down, and he was throwing puches at my face, that busted my nose, lip, and eye, but I was so pumped, it felt like a light touch from a kid. He, Sean, (not the guy I was facing) then got put in the hospital for his loss of blood may have put him into a light coma.

There are a few reasons why Memo's wife and son would get killed. One, again to effectivly portray the point that there was a new boss in town, and while he could have lied, word may have leaked out that they weren't dead and it would have all been spoiled. Very few people can be trusted, especially in that game, which is why "diablo" had nearly all of the lead dealers and handlers killed. Two, the scene at the beginning, showing Memo dancing with the strippers, showing that he, Memo, was still a very carnal man, and desired more than a marriage, would want to start over with no one to report to. This was shown again at the end when he was talking to the two women at the table. Three, again to effectivly portray the illusion of a new cartel. Most normal men would try to avoid in every way to kill their loved ones, but in the human conscience and spirit, wickedness and true unselfish love cannot co-exist, for one will remove the other. Therefore, he did not at that time love his wife as much as he loved his plan to be free again. Let that be a lesson to those that date dealers, thieves, and all those that don't treat their fellow men well, that love and wickedness cannot co-exist.

My two cents. Hope it helped.

"Everytime you stop and think... I'm alive... and being alive is fantastic, you are a part of the circus of Dr. Lao." The Seven Faces of Dr Lao