I'm saying that even when kabuto told madara that he and oro figured out how rinnegan was achieved, madara never assumed that kabuto knew about him having senju cells, why? if kabuto knew how an uchiha gained rinnegan, how would he not know that he had senju cells if the senju cells is how you get them?
later, kabuto revealed to him that he knows about him having senju cells, madara then becomes surprised and checks his shirt for something. after realizing this, and that kabuto knew about him having the senju's dna, he then proceeded to use the wood element.
and as for the eyes, it looks to me that it became diluted through time, it first started by the father giving giving it through a new generation(his elder son) that is when this dilution began. generations later, it became known as the sharingan, remember, even the sharingan now doesn't look like the elder son's eyes, yet the both came through the same blood. the elder son's eyes were more similar to the rinnegan, they just spiraled instead of circling, so through time, it became even more different.
