Yes, He saw it. He tells Jesus, "Rabbi, we know that You have come from God
as a teacher; for no one can do these signs that You do unless God is with him." In this way, Nicodemus testified about the kingdom of God.
The kingdom of God is wherever God has dominion, and Nicodemus recognized it when he saw the miracles Jesus performed. Nicodemus rightly concluded that Jesus was doing the will of the Father and came from God. In light of this, Jesus affirms the sanctification of Nicodemus, alluding to the reason why Nicodemus recognized the signs for what they meant. He would not have understood the significance of the signs had he not already been born again.
The following is an oft-misunderstood passage. The NASB has it correct.
Luke 17:20-21
Now having been questioned by the Pharisees as to when the kingdom of God was coming, He answered them and said, “The kingdom of God is not coming with signs to be observed; nor will they say, ‘Look, here it is!’ or, ‘There it is!’ For behold, the kingdom of God is in your midst.
Some folks misunderstand Jesus to say that the kingdom of God is within our souls or within our hearts, and it can't be seen. But that is not what Jesus meant. Jesus means to say that the kingdom of God consists of people, not places. The kingdom of God was in their midst because the King was in their midst, and he was enforcing the will of God while they watched, just as Nicodemus observed.
Did Jesus contract himself when he said that the Kingdom of God was not coming with signs to be observed? After all, Jesus' miracles proved that he was indeed the Son of God and the king of Israel. He did not contradict himself when he said that the kingdom of God is not coming with signs. Instead, he meant that although he gave the Jews signs, many of them failed to recognize that the King had already arrived. The signs of the Kingdom had been given, but Israel could not benefit from them because of unbelief and incredulity.
But Nicodemus DID recognize the meaning and significance of the signs. According to Jesus, being born again is the factor that explains why Nicodemus recognized the kingdom, while other Jews failed to see them as indicative and meaningful.