[[ To be fair, Orochimaru isn’t responsible for the mass of tiny clones. He’s only responsible for the original Shin. Shin Sr cloned the lot of small ones which eventually turned on him. Naruto and Sasuke agreed it wasn’t really the fault of the small ones because they are children. That is why they are taken to the orphanage so Kabuto can care for them.
Orochimaru being able to live freely and with very minimal regulation is actually explained by Orochimaru himself in his novel. I’m going to add the quote. (It’s also the reason why Kabuto and Sasuke are not jailed. They are the “The World Needs Us So They Can’t Contain us” squad.
“But it is strange that you can move so freely like this,” Sasuke said, staring in the direction of the boat’s progress through the fog.
The murder of the fourth Kazekage in the operation to destroy Konoha. And Orochimaru had committed many other grave crimes in addition to this.
“Goodness. You’re one to talk, Sasuke.” Orochimaru retorted, staring at the waves blown up by the wind. And it was true. Normally, Sasuke would have also been imprisoned. “And Kabuto. He’s a war criminal fromt he Fourth Great Ninja War, and he lives in the outside world too?”
(The novel has a couple of pages of Orochimaru explaining Kabuto’s backstory, the pain he went through, his connection to Nono and Itachi, and how the chances of Kabuto turning “evil” again are slim to none.)
“Also…perhaps its insurance for those times when something nonsensical happens.”
“Insurance?”
“Every era has its dissenters. And when those dissenters show up, inhuman powers like ours are sometimes required. Because some things cannot be protected with justice alone. So taming us properly is for everyone’s sake.” Orochimaru let out a short laugh.
“What?”
“Your friend likely doesn’t have an inkling of all this in his head.”He meant Naruto.
“I guess so.”
TL;DR Kabuto, Sasuke, and Orochimaru are insanely powerful and at some point the world is going to need them. Letting them be free, keeping their skills sharp will help rather than incarcerating them. Orochimaru will offer his abilities in the time of need and as repayment the world will mostly turn a blind eye to him. It’s a mutual relationship.
And Orochimaru is monitored, to some extent. Poor Yamato got stuck watching him for life. Orochimaru basically knows it would work against them to try to jail him, and he’s using it to his advantage.
Note that, I’m not saying Orochimaru should be free, I’m explaining why he’s free. It would be a story arc in itself (and nearly impossible) to kill Orochimaru completely or keep him jailed. I’m also not saying he should be jailed/killed. It would be too hard. ]]