Both are important subjects and can be useful tools for many other disciplines. Teachers need to help students recognize the difference between the two. Evaluation Problem solving lends itself to a wide variety of assessment methods. The traditional test is not always a good tool for assessing students problem solving abilities. If the task is a real problem then the blockage a student experiences may last longer than the test allows.
Observation is a good tool when students are working in groups.
A teacher can assess the students perseverance, self-confidence, interest, cooperation, contribution and much more. I was using a middle school classroom to try assessment by observation. I had given the students a few problems to work, in groups, and I was going to observe and write down what I learned from that day. After I passed out the problems I spent the rest of the period running from group to group answering the same questions. The next day I decided to try something new.