How do I keep my stitch lines lined up when a pocket sits over another seam?

On the alignment, the trick I've settled on is to stop measuring and let the holes do the work. Punch the skip stitch line on the outer panel first, wherever you want it visually. Then place the hidden pocket layer behind it exactly where it'll sit in the finished wallet, glue or double-sided tape it in that position, and use a fine awl through the alredy-punched holes to mark the stitch line on the piece underneath. Now every hole on the hidden pocket is guaranteed to sit dead centre under a skip hole, because it was marked through the actual hole, not measured from an edge that curves.

The reason your dividers drifted is that you were measuring from the top edge along a curve, so each mark inherits a little angular error that adds up by the bottom. Measuring hole spacing along the stitch line itself is much more forgiving. If the two layers are taped together in thier final position you can punch through both at once too, though on cordovan I prefer marking through with an awl and punching separately, because a punch through two layers tends to enlarge the hole on the top piece slightly. Do the dry run on offcuts of the same thickness and temper as the real panels. Shell punishes guesswork since every hole is permanent, and a couple of millimetres of drift is basically a rebuilt panel. Also worth checking your spacing rhythm: if the skip holes land mid-hole rather than on-hole relative to the hidden stitch, no amount of measuring saves you. Count holes, not distance. On the Tokonole, I'd say light coat, yes, but honestly shell's flesh side is so dense it barely needs it. I've done it on the interior panels where cards slide in and out, and it does add a bit of slickness and wear resistance. Just go thin, because shell can darken or look plasticky if you glob it on, and the flesh side has that lovely matte quality you don't want to lose. Test on an offcut first and see how it reads once dry.

I'm just starting my first wallet so this thread is a bit ahead of me, but I tried taping two scrap pieces together and punching through both like was mentioned, and yeah the holes on the top layer came out wider than I expected. Interesting that shell does that worse. So when you mark the underneath layer with the awl, do you poke tiny dots and then punch those dots one at a time on their own? Also that bit about counting holes instead of measuring distance makes sense now, I never would have thought of it that way.

That awl-through-the-holes method is exactly how I got my last bifold to line up, can vouch for it. One thing I did differently was skip the glue and use a couple of strips of low-tack tape on the flesh side to hold the layers in position while marking, because I'd had glue soak through and leave faint dark spots on shell before. Took me two ruined panels to learn that lesson. And I'd second the counting holes thing, I lay my pricking iron along the line and just check that every iron-width lands on a hole, no ruler involved at all.

One thing I'd add on the drift question is that shell moves a bit after you cut it, expecially if you case it or handle it a lot, so a template made from the actual finished panel beats measuring the pocket blank on its own. I trace the pocket position onto a scrap of thin card laid over the outer panel, punch the guide line through the card, and that card becomes my reusable jig for any future wallet in the same layout. Takes ten minutes and saves re-measuring every panel.

Also, on the burnish, I've found the flesh side of shell takes a very light coat of something like that and ends up looking fine once it dries, but the real tell is how the edge of the pocket mouth wears after a month of card sliding, so maybe leave one test panel uncoated and compare them side by side over time.

Been working shell since the days when you bought it off the saddle shop's scrap bin, and the one thing I'd add is don't fight the curve at all. I stitch the hidden pocket on completly first, then set it in place and punch the skip line on the outer panel to match what's actualy there, not what the pattern said would be there. The finished work is the only template that never lies. Also, dividers on a long run were never how the old-timers I learned from did it. A scratch gauge run against a straightedge, then eyeball the curve section by eye and adjust. Shell's got memory too, once you crease it at the fold it'll pull your layout a hair, so do your marking after the fold's set, not before.

Update: ended up going with the awl-through-the-holes approach, but with low-tack tape instead of glue like the other poster suggested. Worked a treat, skip line and hidden stitches landed dead on. Also worth saying the reply about shell moving after cutting was spot on, my pocket blank had shifted from the template so I marked everything off the actual panel. Tokonole on the flesh side went on fine, no regrets.