You are correct with the design issues. I'm looking forward to moving away from residential remodel work. Homeowner's only understand one thing, price. They don't care what it looks like as long as it's inexpensive. That doesn't do well for me, because I end up priding myself out of a job, or losing the job to a non-compliant bid. I might not know the code like I wish I did, but I will certainly find out what is right and wrong before starting an installation.
There actually is a code issue, but it will go away once I extend the circuit to the 2nd shed. The PVC conduit terminates into a handy box mounted on the outside
of the shed. At least there is a weather proof cover on the handy box though.