Rohm himself had co-founded the SA (so he didn't "become" its leader in that sense but rather began in its leadership from day one), he had taken a leading role in the Beer Hall Putsch and was a close friend of Hitler from the early days of the Nazi Party - in fact he was seen as one of its leaders.

So he was insulated from criticism and indeed even when he was taken out in the Night of the Long Knives it was far more to do with the militant politics of the SA and the fact Hitler had begun to see him as a possible rival than anything to do with his sexuality (although that helped justify the move).

Rohm was so embedded in the Nazi hierarchy that once he had been executed they had to redo their prestige propaganda film (Victory of Faith) which gave centre stage to a number of top Nazis including Rohm. They destroyed all existing copies (or so they thought, one eventually turned up again) making the famous Triumph of the Will which placed Hitler as the single hero of the movement.

So, anyway, Rohm was central to making the Nazi party what it was, and his military experience and dedication to the cause made him indispensable. His political connections and, indeed, his massive street army made him unassailable until Hitler himself made the decision that he had to go.

To put it another way, if you were fairly senior in the party and disgusted at Rohm's sexuality what exactly were you going to do about it? Who were you going to gossip to about your misgivings given the potential fatal consequences to either your political career or, more seriously, your life. Were you going to complain to Hitler who was Rohm's best friend? If not Hitler then who? Just the fear of repercussions would have been enough to chill any thought of raising your misgivings.

Having said all that his sexuality (and those of his senior officers) was used as a post-fact justification for their removal and the much hollowed out post-Rohm SA was given this instruction by Hitler himself “I expect all SA leaders to help preserve and strengthen the SA in its capacity as a pure and cleanly institution. In particular, I should like every mother to be able to allow her son to join the SA, Party, and Hitler Youth without fear that he may become morally corrupted in their ranks.".

There's a very interesting piece at the Jewish Virtual Library on this (link at end) which is good on how it was only after Rohm that the Nazis really unleashed their homophobia "Until 1935, the only punishable offence had been anal intercourse; under the new Paragraph 175a, ten possible “acts” were punishable, including a kiss, an embrace, even homosexual fantasies! One man, for instance, was successfully prosecuted on the grounds that he had observed a couple making love in a park and watched only the man."

Even then these laws were as much an instrument of political terror as they were a genuine attempt to eradicate all homosexuals - the laws being framed so loosely that anyone deemed undesirable could be prosecuted under them.

By '36 you could be executed for "sexual deviancy" if you worked for the state but civilians who were jailed when released were taken into permanent "protective custody" - this was also enforced retroactively so if you'd ever come to the attention of the police they took you in. By '39 they started sending gay people to the camps.

Prior to this we should also note that pre-Nazi Germany might not have been as homophobic as we assume. There were open gay bars (which the Nazis shut down but, weirdly, reopened in '36 for the Olympics) and something of a sexual revolution had been taking place since the war. Given that until '34 the Nazis themselves had made no significant moves against the gay community we might assume that many Nazis themselves were either relaxed about Rohm's sexuality (leaving aside those who were gay themselves of course) or at least did not view it as a priority issue.

It was only once they had gained state power did they gradually begin to bring anti-homosexual laws into force.

So, in summary - Rohm was central to building the Nazi party and its institution from its early days so was too powerful for ordinary members to complain about, coupled to that Germany had a thriving gay culture that many Nazis were pretty relaxed about and they only started gradually ramping up the persecution of gay people after Rohm was dead (whether those two things are connected is open to speculation).

https://www.jewishvirtuallibrary.org/homosexuals-and-the-third-reich

I'll add two tidbits to the other answers here.

First off, Hitler absolutely knew about Röhm--they were old friends, and Röhm was one of the few to be on "du" terms with Hitler. (in German, this is a sign of close friendship.)

Heinrich Himmler, however, was both a rabid homophobe and, as the head of the much smaller (in 1933-34, at least) SS, was a rival of Röhm's. Himmler wanted to get rid of Röhm for a mixture of political and personal reasons, then. So it was Himmler especially who really pushed the line to Hitler that Röhm was acting immorally. In one of the times that Himmler was complaining about this to Hitler, Hitler got annoyed and retorted, "The SA is a band of rough fighters; it's not a moral institution for the education of nice young girls!" (Evans, Third Reich in Power, 531) Interesting; the whole homosexuals-are-too-feminine thing here is flipped on its head. (And Röhm, to credit Hitler's powers of observation, was a total thug: a violent, brutal man. Proud to shatter your stereotypes??!?)

But it was the "evidence" (manufactured by Heydrich at Himmler's behest) that Röhm was conspiring with the French (!) that finally convinced Hitler to get rid of Röhm.

Still, one of the pretexts at wider purge was the supposed immorality of top SA leaders (a number of whom were homosexual), so the purge of the SA leadership in the Night of Long Knives (1934) also sparked a new trend of anti-homosexual policies embarked upon by the Himmler-led SS (and all of its racial-office affiliates.) There's an excellent chapter on this in Wippermann & Burleigh's The Racial State, though it's a bit dated now.

Secondly, whether the Nazis had been "gay" (and therefore, immoral) or were instead "sexually repressed" (and therefore, prone to act on this repression through violence) became a main point of debate in German society after 1945.

The "Nazis were gay" (and thus immoral) side won out in the early '50s, and Konrad Adenauer's Christian Democratic party portrayed itself as trying to revive "morality" in the wake of pre-1945 impulsiveness and moral abandon. This was, in fact, a very clever way to position the immorality of the Nazis and the supposed-immorality of the Weimar era side-by-side as somehow the same thing... because both were 'gay'.

By the late '60s, though, this was flipped around: "The Nazis" were now seen as themselves sexually repressed (with the repression of homosexuality as some of the evidence for this), and this was used as a way to link the Nazi regime (1933-45) with the CDU-led (Adenauer and post-Adenauer) regime, which had left a lot of the anti-homosexual laws on the books. Nazi-era judges who had sentenced people for homosexual 'crimes', for instance, continued to be judges into the '50s, and continued to sentence people for homosexual 'crimes'.

I'm doing damage to the subtlety of her argument, but all of this comes from Dagmar Herzog's outstanding book Sex After Fascism. Worth a read!