why does ryo's watch stop working...

[Chaos]

ChaosZ3RO has confirmed it. The watch does in-fact disappear and is "frozen" in the Notebook-function. Odds are, it is nothing, and only as you stated. Still interesting nonetheless.

Yip. Also, you can see the watch when you open his journal, but the hands don't move. Not even if you exit the journal, wait a bit, and go back to the journal.

(Oops, it being frozen was already mentioned. I'll keep it there for anyone who missed that though.)

(Yeah Yeah, here come the theories.)

[JalceW]

I never noticed the watch freezing in the cave; seems logical though.

In the Yellow Head Bldg, the watch simply becomes event-based: so you might have about 15 minutes pass after a skirmish with some thugs, and a bit more for a scene with Yuan or Dou Niu. After fighting Master Baihu, a few hours elapse until the watch is fixed at around 5.00-6.00 (hence the sunset seen atop the roof).

[threeblades]

So maybe that means the next scene (after the cave) is supposed to happen during the afternoon...

[Kenny]

I think the same thing happens at a certain point in the Yellow Head Bldg....I don't really remember...

It does, but I got the impression it moved much slower.

[extraordinarybadgrocer]

The watch moves in real time, I think. So if you wait a real hour the watch will advance an hour. At least, I think it does. If you hang around too long I think it just moves you on anyway. I think you have to do certain things by a certain time.

[Lan Di-sama]

I imagine it's simply so you don't spend the whole day there.

[threeblades]

I think you're right, my theories about the time being stopped were probably a bit exageratted... this is Shenmue, after all.

If you hang around too long I think it just moves you on anyway.

Really? I never noticed that. I guess there must be a limit. Nothing would make sense if you could just stay there untill the date that gives you the bad ending (althought it would be insanely long)