In answering your question, we’re going to have to look at some more specific examples as there would have been widely varying views across time and space! – this answer will look at Anglo-Saxon England in particular. We will need to re-examine a few assumptions too. Firstly, the geographic and spatial construction of the world in the early-to-high medieval period results in not only a different generally perceived shape of Europe (the Anglo-Saxon Cotton World Map from approximately 1020-1050 CE puts Scandinavia and Denmark reasonably in a position relative to Denmark that could be considered "north"), but is also constructed from sources that are not designed to be “objective” geographical studies (e.g. peripli – documents that make observations and records of coastlines) – medieval cartographical works and geographical works were often inseparably intertwined with biblical and classical sources, and often placed a didactic function above any navigational function. “The Western World” constitutes quite a lot of material, so I’m going to focus my answer on Anglo-Saxon England with a bit of medieval cartographic/geographic perspectives since it was what I am comfortable with – hopefully others might be able to add to this question with regard to other places on the receiving end of Viking raids/settlement, or to add to/correct/argue against my answer!
To use the title of Evelyn Edison’s 1997 Mapping Time and Space, the medieval understanding of space is not only going to be “mapped” by space in quantitative terms, but also immeasurably stretched and distorted by “time” – the interloping of scripture, histories, and plenty more. (1)"North" wasn't only a geographical indicator - the term was loaded with various negative connotations which often have their roots in the above sources. Here is an extract from the Book of Ezekiel, no. 38:
"Son of man, direct your face against Gog, of the land of Magog, the prince, leader of Meshech and Tubal, and prophesy concerning him. Say: Thus said the Lord: Behold, I am against you, Gog, the prince, leader of Meshech and Tubal ... Persia, Cush and Put will be with you ... also Gomer with all its troops, and Beth Togarmah from the far north with all its troops—the many nations with you."(2)
Where this is specifically referring to is a matter of debate, and is often quite fluid. The Legend of Alexander the Great is a tradition which would have associated the apocalyptic hordes of Gog and Magog with the Scythians and the lands around the Caspian Sea – this tradition was immensely popular in Anglo-Saxon England – texts such as The Letter of Aristotle to Alexander the Great(3), The Wonders of the East(4)(i), and the Liber Monstrorum(5) - explore monstrous places and peoples greatly inspired by the Alexander Legend, and were circulated in medieval England. Though much later (but emanating from the same tradition), the medieval mappae-mundi (i.e. medieval maps) tradition often have the North (often on the left-hand side as these maps were generally orientated East) as a place containing all sorts of horrific things going on – on the Hereford Map for example, the North is rampant with cannibalism, barbarism, and people are often depicted as wielding axes (axes were in particular viewed as a nasty and deceiving weapon) (6).
The Alexander Legend often goes that Alexander the Great had walled off Gog and Magog behind a series of mountains, and that in the end times they would burst out. A vague notion of the Vikings coming from somewhere over the sea, from somewhere cold, even if not exactly from the “north” would probably be enough to justify a connection between the Vikings and this apocalyptic imagination, especially with initial Viking raids being particularly detrimental to monasteries. The Anglo-Saxon Chronicle (7) initially refers to the Vikings as Northmen, but as /u/BRIStoneman examines in their answer to a related question, the usage would eventually be replaced with referring to them as Danemen, and the apocalyptic overtones would eventually subside (8).
To summarise, I think the association of the Vikings with the North isn’t really about ignorance – I would find it hard to believe that the true nature of the directions of travel between Britain and Scandinavia wouldn’t have been known, since the volume of trading and mercantile activities would have developed a fairly reliable and functionary sense of space (see Wulfstan and Othhere’s account of their voyage into the Baltic Sea which was given to Alfred the Great) (11)– instead, there were a number of other factors: 1. - the connotations of the North as a depraved place which is abundant in the material which would have been available to literate people in Anglo-Saxon England; 2 - building upon this, even with an awareness of the Viking’s general place of origin, again, it being over the sea and from somewhere colder in climate would probably be enough to associate with a general northern direction. It would be even more appropriate for those in Western and Central continental Europe to assume this if we are to look at actual geography. Again, I highly recommend reading /u/BRIStoneman ‘s answer with record to the name “northmen”, which looks at a possible relationship between Northumbria and the settling of Danes in what would become the “Danelaw” from the Welsh perspective, for example; 3 building upon both of these again, trying to construct the Vikings as "northmen" may possibly be motivated by an attempt to make Britain seem less remote? (i.e., not wanting Britain to be part of the barbarous world of the "north" referred to in scripture, but rather somewhere else) - this one is a bit more speculatory so I would love to hear from others!
CORRECTIONS
(i) -(4), (5) - these don't deal specifically with the "north" (but rather Alexander's campaigns in India) but are evidence of the wider Legend of Alexander - which appears on many medieval maps with the legend's ideas of the North - as having a large influence.
