They were found out in the same way that police these days track down people involved in drug offences. I am making this comparison not because I wish to make any moral judgment about homosexuality (or about drug use for that matter), but because under existing laws, there is a certain similarity between drug use now and homosexuality then. Both are/were illegal, yet widespread, both have/had a whole subculture grow up around them, with networks of people and known hangouts. People not involved in these activities tacitly condone or are at least aware of friends and acquaintances who do partake. You are right to think that people wouldn't be open about their sexual orientation once the nazis implemented their very strict laws against homosexuality, but people had been more open (relatively speaking) during the Weimar period, especially in the larger cities and in certain circles, such as the entertainment and artistic world. Therefore, quite a number of gay men were known to be gay before the draconian measures were introduced.

Some of the ways homosexuals were arrested: police raided suspected meeting places (certain bars, etc) and rounded up the customers, they raided the homes of known homosexuals to catch them "in the act", people denounced gay men to the police, gay men in police custody were coerced and tortured into providing names of friends and acquaintances.