Season 2 - Episode 18 "White Tulip"

When a train car is completely drained of all energy, form both electrical devices and the humans on the car, Fringe science is called in to investigate. The trail of clues quickly lead them to a professor who has not only perfected a machine that can be used to travel through time, but also implanted this machine inside his own body. Before Fringe is able to apprehend the professor, he jumps back to the train and the whole day starts over. This happens a few times, each time Fringe nearly apprehends the professor a few different ways, and each time he escapes. Finally, Fringe discovers that the professor's wife died a few months earlier, which is where he must be trying to get to. Walter is able to have a heart to heart discussion with the professor about the dangers of saving his wife, hinting about his own experience with Peter. Walter also reveals that, although he has been wanting to reveal the secret to Peter, he is waiting for a specific sign from God, a White Tulip. The professor finally succeeds in his goal of going back to save his wife, but because of Walter`s words, he allows himself to be killed instead. He does however leave a message to be mailed to Walter in the present, a picture of a White Tulip.

And where is the Observer? Well he is quite difficult to see in this episode, and also quite difficult to take a picture of. he is standing in a doorway behind where the professor and his fiancée get hit by the truck. He is in the customary red box so that everyone can see him.