Yeah Shadow Warrior does not work close up. If you read the description, it says enemies at a distance. To take full advantage of this, if you use it after you go out of LOS (line of sight) it works much better. Things like Ebony Mail however are reported to break Shadow Warrior as well as some other items/effects. However, you do not really even need Shadow Warrior, just Sprint away or Silent Roll away and you can reset the enemy and go back to Stealth. Enemies should never be able to catch you in almost every situation.
Not exactly true. The enemy will quickly re-detect you if you use it close, but it works everywhere. In fact, you can run up to an enemy out of stealth, quickly press into stealth while attacking and get the kill cam sneak up behind them neck slit animation.
If stealth ever glitches out and I am seen, I usually do the above. I've had 5 guys trying to attack me while I spam in and out of stealth. The moment I enter I attack, it will work about 25% of the time.