Season 5 got off to a pretty slow start. Company Man was slow and dull, Bloodlines was just annoying, as with any episode in which Madeline gets more than a few speaking lines.
This was a good and interesting episode. Michael isn't crazy, I actually think he's suffering some kind of withdrawal. He's uncomfortable now that he actually does have (to a degree) the answers he was so desperately and constantly searching for about 4 intense years. But there's that little bit left that needs to be answered, he's so close. That's why he's obsessing.
The main plot was cool too, although we've seen this general story many times on Burn Notice. I don't recall the show ever introducing an undercover situation quite like this one, though.