Rambaldi is alive. Like his 400 year old flower. And in trying to piece together the prophecies.... he's probably IN Mount Subasio - which is why Sydney won't see the sky behind it.
The prophecy is as follows (thanks TwoEvilMonks.org!):
"This woman here depicted will possess unseen marks. Signs that she will be the one to bring forth my works. Bind them with fury, a burning anger unless prevented at vulgar cost this woman will render the greatest power unto utter desolation. This woman, without pretense, will have had her effect, never having seen the beauty of my sky behind Mt. Subasio. Perhaps a single glance would have quelled her fire."
I think it means that Syd ends up killing Rambaldi or whatever he uses to create "eternal" life. The hint of the point of all of Rambaldi's works has always been at eternal life, not bioweapons or other more mundane things.
As for this actual episode... Syd has to find out why the CIA is so hell-bent on digging up the Rambaldi secrets. I think the documents that Lauren tries to steal outline the CIA's involvement in the Rambaldi following, probably more stuff to make her question Jack's putting her in Project Christmas, too - like they knew that she was the Chosen One.
I guess this because Vaughn's father was a Rambaldi follower and knew that Nadia was the Passenger (how, since the music box and all the other documents and artifacts had been scattered and unused? I think the writers actually wrote themselves into a hole here with this stuff). The only other way they might have known might be through Conrad the monk, who seems to have had a lot of knowledge without having all the artifacts together to make Il Dire. It's starting to feel like this show has taken an X-Files turn. I used to think that the plot was tighter, but not anymore.