Records show as late as 1412 that there was Norse settlement in Greenland, so why wasn't knowledge widespread in Europe that a relatively short distance away from that, was Vinland?
Furthermore, the Vikings had fought with Native Americans. Wouldn't their records be able to show that the peoples they made contact with were nothing like the people of the Far East?
The Norse sagas told tales of Vinland, and Columbus (well, his son and biographer) claimed he visited Iceland in 1477, so the potential is there that he would have heard some rumor of it. However we have no conclusive proof that he was there, much less that he heard anything.
Furthermore, the Vikings had fought with Native Americans. Wouldn't their records be able to show that the peoples they made contact with were nothing like the people of the Far East?
Even after meeting the people of the West Indies Columbus was convinced he was in the East Indies (hence the name). You've got to remember that people in Europe at this time had no real idea what people in the Far East were like, and certainly if Columbus couldn't tell the difference in person a few Icelandic tales he may or may not have heard weren't going to inform him.