It's a good question but oftentimes it's a mistake that many (HE) players make in Omaha
True...lot of players struggle with this....
Looking at showdown, in Holdem you see 7 cards and any of them will be used to define your hand, no restrictions.
In Omaha you see 9 cards but your hand is defined by 2 of your holecards and 3 of the boardcards, nothing more, nothing less.
So in this example player 1 will never be able to make a diamond flush.
As player 2 made the flush on the flop, the only way player 1 could win is if the river would pair the board to get him a boat or quads.