[Daann]

I don't understand why anyone would fold in hand 1. SB has played this so strangely that you have to call. If he was worried about a draw out, then he wouldn't have flat called the flop bet, he would have reraised. If he wanted to slowplay a bit until the pot was big enough, he would have more likely have waited to check raise the highly probable bet from either you or the min raiser on the turn.

The only reason I can think of for this play with the nuts would be that he put one/both of you on a big draw (eg a set) which you would call all in on either the flop or the turn and so wanted to wait for a safe turn card to push. Seeing as you have no read that he thinks like that, you have to call. I wouldn't be that surprised if SB showed something like AT/AJ.

I would reraise the flop. They are going to call with a much larger range of hands than just the nuts (sets, two pairs, pair + draw...) and there are a load of cards that can fall that will kill your action/hand.