You're woefully misinformed, Jon.
These are the facts:
In 1998, Sandusky was accused of molestation. Nothing came of it but he retired shortly thereafter at the age of 55, in his coaching prime, and never pursued another coaching spot in college or the pros (we know why he was so much more interested in running his "charity"), this despite the fact he had previously been regarded as Paterno's likely succesor and certainly as potential head coach elsewhere if he pursued it.
So in 2002, when the events that ultimately led to this current scandal happened, Sandusky was not on staff, but he did have full access to university and team facilities. In the wake of the graduate assistant report of what he saw, Sandusky was simply banned from the facilities.
So really there are two issues here:
It sounds like in 1998 Penn State knew what his predilictions were, and simply wanted him off the staff, kids be damned. Did he go back to the charity because other schools heard whispering about him?
In the same way, in 2002, Penn State essentially said to him "whatever you do to those kids, don't do it on our property again."
Shameful.
Thanks Dan.