What Japan knew about the Russian squadron

Did Japan know about the Second Pacific Squadron's condition and the quality of its ships and crews?

Yes; much of the information was public knowledge, and Japanese planning appears to have accounted for the approaching force effectively.

The squadron's misadventures and general quality were widely reported in newspapers instead of being hidden behind a successful security screen. Japanese planners could therefore follow the force's condition without relying solely on secret intelligence. The exact effect of each report on their decisions remains unclear. Japan's effective preparations for the squadron's arrival suggest that the available picture was incorporated into planning.