It just on its face seems like such a bad idea, did folks warn of possible issues at the time?
There was absolutely opposition to the agreement in the West. For the most part it took on one of two, similar yet different, forms: one was the outrage at the British Administration for violating the Arab's right to self-determination, and the other was opposition in light of the British not using their influence to obtain more from the Arabs.
Two advocates for Arab self-determination were T. E. Lawrence and Woodrow Wilson. It's widely known that Woodrow Wilson advocated very strongly that each nation, especially those under imperialist overlords, had a right to act independently and govern themselves. During the War, the British convinced the Arabs to rebel against the Ottoman Empire by promising them independence, which was seen by Wilson as an act of goodwill. When the secret agreement was published, he was offended at the encroachment of his ideals for pure political gain. Following the war, his office administered the King-Crane Commission as a last-ditch effort to investigate how a division of the Middle East should take place as though to minimize disaster. However, while originally observed by the other members of the Great Four (Italy, Britain, and France) the Commission was subsequently ignored and the Sykes-Picot Agreement was followed during post-war negotiations instead.
Similarly, T. E. Lawrence, following his awareness of the agreement, felt that his direct support for the Arab rebellion was based on lies. Held a disdain for the agreement which was showcased in his autobiography. Lawrence knew about it when it was drawn up, due to his involvement with the rebellion, and came to a moral crossroads when it was signed. He struggled with whether to continue to lie to his Arab allies or reveal the truth. In the end, when it was published, Lawrence begrudgingly pushed forward and helped the Arabs in their, now seemingly empty, campaign. As he wrote in The Seven Pillars of Wisdom, "I had to join the conspiracy and assure the men of their reward. Better we win and break our word than lose."
Detractors from a pro-British standpoint included William Reginald Hall, the then-Director of Naval Intelligence for Great Britain. He actually was involved in the review of the agreement's draft, but he berated it for ignoring the possibility of including a "Jewish home", as well as strategic importance of railroads through Palestine and Egypt, into the agreement. Similarly, Henry McMahon, the British High Commissioner in Egypt at the time, felt betrayed by his superiors that the deal had taken place: he was at the forefront of negotiations with The Sherif of Mecca, Hussein bin Ali, over British support for Arab independence following the war. He too felt betrayed, as the agreement undermined all of his office's work, on top of making him look like a liar to Hussein and his supporters, who would become local leaders following the war.
There were no doubt individuals in other notable positions that opposed the agreement for treating the Arabs unequally, or for disrupting good British-Arab relations, but at the time the agreement was seen by the majority of the West as a means of maintaining good infrastructure (the British) or expanding influence (the French).
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