Did Denethor see Frodo captured in the Palantir?

[Inziladun]

Originally Posted by littlemanpoet

Or is there a reasonable/plausible explanation why Denethor could see Frodo as captive, knowing about the Ring, and Sauron not knowing about the Ring even while controlling what Denethor sees?

To me that still seems the most likely. Logically, Cirith Ungol would appear to be an obvious choice for Denethor to view.
I go back to the question of why Sauron would have thought that the knowledge of Frodo's capture would have been of any special heartbreak to Denethor. From Sauron's own demonstrable actions, it seems clear that he really did not view Frodo as anyone but a spy. There were so many other things Sauron could have "allowed" Denethor to see in order to create despair: the marching of the Haradrim to Mordor; maybe legions of Orcs overshadowed by wingéd Nazgûl; the Black sails of the Corsairs. Why would Sauron bother with making Denethor look at one little hobbit?

Also, Pippin's use of the Orthanc-stone was only a little over a week before Denethor's "final straw" viewing, March 5th. Gandalf surmised that that event would cause Sauron to be preoccupied with Saruman in Isengard. Sauron would have known that the hobbit in Cirith Ungol could not possibly be Pippin, so I think Sauron might have been more likely to associate Frodo with whatever had happened to Saruman, rather than Denethor.