It was kept secret. Very few actually knew who his parents were, even though if anyone bothered to look and think about it, they probably would've been able to figure it out. It being kept secret is understandable to an extent as his parentage logically would've painted an even bigger target on his back, but he absolutely should've been told well before he actually found out.

Also, a lot of people seem to have very little to no knowledge on how this kind of thing even works in-universe, so it seems they thought he was literally the Ninetails, or they were scared of him being potentially unstable and dangerous (like Gaara, not that they knew who that was).

Also, Danzo is the biggest piece of shit and intentionally blabbed about his status before it could be kept under wraps apparently. Why you would risk your military deterrent like that isn't really clear, but the only reason I can think of is that it was a way to try and make Naruto dependent on him eventually, but that obviously didn't work out.