No, henna doesn't dry out my hair. In fact, I don't even use conditioner at all anymore, because my hair is in such fantastic shape after years of hennaing. (I just use shampoo and then a little gel.)
Anyway...clear henna from Sallys was probably cassia, but it would have been quite inferior quality to what people who want to dye their hair yellow/blonde would use. Cassia takes some time to figure out how to get the most out of it, and it's stain is light as compared to the intensity that henna can have, but a quality cassia does add color.
I do not add any oils to my henna, because oils inhibit dye uptake and I'm trying to get my henna stain as dark and powerful as possible. Besides, oils weigh my hair down. Some people add oil to help with rinse out, but that isn't an issue with a gloss, because the conditioner makes it easy to rinse.