Syed in arabic Carries two meanings;
It's either translated as leader/Master.
It comes from the verb "Saada-Yasuudu" which means to rule, govern (someone or something).
Like The Prophet salallaahu a'lam is known as a Syed, He mentions in a Hadeeth "Ana sayyid walad Bani Aadam yawmul qiyaamah wa laa fakhar.." I am Master of the Children of Banii Aadam..
It also carries another meaning like the one you last mentioned "Title of Muhammed's direct descendants.."
Wallaahu a'lam, please correct me if I may be wrong ppl.