Aha, but the sliding block has the kinetic energy of mgΔh only just (read: millionths of a second) before the collision. Therefore the kinetic energy of the sliding block is mgΔh. Equate the two and you will find its velocity. (When it is about to connect with the other block, its velocity will only have 1 component, which is the horizontal velocity, the one you are after)
You are observing only the 2 kg block before the collision, don't forget that. Conservation of momentum kicks in after the collision, there is no need to consider the 2 blockmass before hand.
(I have to say, I tried to find the velocity of the 2kg block and I get that it is 14 m/s , which is a bit scary, but considering there is no friction I suppose it is possible.)