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Why Sinbad sided with Kouen: Because Kouen is bigger. His assets (several loyal Metal Vessel and Household Vessel users) is (mathematically) bigger than Hakuryuu (a Magi and 2 Metal Vessels). Sinbad playing it smart, it's more of alliance of convenience.
Besides, Hakuryuu is driven by what it seems as blind hatred (declare war when main perpetrator of his suffering is [supposedly] already dead), that makes him loose cannon. You do not work with loose cannon if there's alternatives. Kouen might be ruthless and dangerous, but he is more stable and predictable.
Also, Judar. From what we sees so far, it is probable that Judar has gravely wronged Sinbad in the past, which is probably related with Sinbad's Depravity. From there, we can assume that Sinbad assumes that everything related with Judar= BIG F***IN PROBLEM. DO NOT WANT. Judar allied with Hakuryuu makes Hakuryuu automatically enter Black List.
About Alladin and Alibaba being naive: Well, they always success with idealist ideas in the past (admittedly, to some extent). There's no reason to stopping it now. They can convince Hakuryuu: war averted, can't convince Hakuryuu: at least they tried, and they did notioned that possibilities.
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