Trouble with a type 2 conditional

[Belles1654]

"I would say hello, if I saw you"

This is a type 2 conditional, but I don't know what it really means.

whenever I try to explain it I'm baffled and my students think it's an error in the handout.

I understand,
I would buy a car, if I had money. but I don't it's a dream that could happen.

But when I say,
I would say hello, if I saw you, it sounds like an oxymoron. I am obviously talking to you, it sounds like a type III conditional. Can this utterance make sense as a type II conditional or should I replace it??

Thanks in advance,
Belles

[Mordant]

Just because I'm talking to you doesn't mean I can see you. I may be talking over the phone, mailing a letter or sending an e-mail.

Phone conversation:

A: Sally, if you saw me walking down the street tomorrow, I doubt you would even say hello.
B: I would say hello if I saw you. You know me better than that.

[Belles1654]

Thanks!