he could have met him, but as far as seeing the master as the first, he didnt have to meet him for that to happen. like tranquility said about angelus mentioning him, and spike seeming to recognize him, he could have just heard of his reputation. we already know he'd read about the annointed one, since he said so when he first showed up, so that he had heard of the master is a likely possiblity. also, by the time season 7 came around, buffy likely had told him about the master, and perhaps it was in enough detail that he could recognize him. additionally, they didnt all have to be people spike knew. maybe the first was just becoming all the biggest threats in sunnydale through the years for symbolic purposes. spike was kind of out of it then anyway.