If you are working from an inaccurate timeline then of course one person can't be in two places at once. I agree they were in the tapas bar when Kate raised the alarm. It would be idiotic for someone to disappear at this time but not as soon as the alarm is raised when people are splitting up and going in different directions to search for Madeleine.
I don't believe Kate raised the alarm at 10pm which as taken as fact. I believe it was raised before 10pm (anyone directly involved would want the timeline to be later even if it's only 3 minutes, the half hour checks are being presumed as fact 9pm, 9.30pm, 10pm) and that the Smith family passed the suspect at an estimate time of 10.02pm. Mrs Smith was sure on the time and she said they left Kelly's bar at 10pm (see statement excerpt below).
This gives an estimate period of 4 minutes from the start of the first searches for someone to run (as many were doing in a panic not knowing which way they were going but I believe someone knew exactly where he was heading) and get to the spot where he was seen by the Smith family. One person being in two places at once is not impossible if the timeline turns out to be inaccurate.
Aoife Smith Statement
— Around 22H00, they left Kelly's Bar. The group headed, on foot, for their apartment.
— Questioned, she responds that she knows the time that they left because her father and her brother decided to leave early that night. There were two reasons for this: one was the fact that her sister-in-law was not feeling very well and the other was because her brother, sister-in-law, nephew and son of her sister-in-law finished their holiday the next day and had to catch the morning flight returning to Ireland.
— Upon leaving the bar, they turned right and headed along the road for 40/50 metres. At this point, they again turned to the right and ascended a small street with stairs that give access to Rua 25 de Abril. As they were a large group (four adults and five children) they travelled apart from each other along the street with some more to the front and the others more behind. She does not remember how they were divided [who was where].
— The deponent remembers that upon reaching the top of the stairs, she looked to her left and saw a man (1) with a female child (2) in his arms, walking along the pavement of Rua 25 de Abril. He was walking in her direction at a distance of, give or take, two metres.