Grammar Nazis

Whether or not it is part of the quotation, all punctuation is supposed to go inside quotation marks.

Not true. For example, if your sentence is a question, and your quotation is not, you put the question mark outside the quotation. If the quotation is a question then you put the question mark within the quotation marks.

Examples:
Did he say "I love you"?
He said "are you going to the store right now?"

I see your point. I concede that I should have dropped the "but" because one cannot start a sentence with it, but the "b" in "but" should not have been capitalized. One does not say "Ah, He saw us!"; One says "Ah, he saw us!" or "Ah! He saw us!". I used a comma, therefore I did not capitalize the "b" in "but".

You can start a sentence with "but," however, one must be very careful when doing so. Additionally, you may also write your sentence like this: "Ah! he saw us!" The exclamation mark acts much like a comma, as well as giving the reader the cue as to how the speaker is saying "ah." In this case, the exclamation mark does not end your sentence, and therefore the word following the exclamation mark is not the start of a new sentence. This means you don't have to capitilize this word, which in this case is "he."