If we take fillers into account, (bear with me here) it is established that Konoha, despite its strengths, is already known for letting their rogue shinobi run free without doing much.

The notion is, the better the village treats its shinobi, the less rogue shinobi there will be. It's natural to assume that only Kirigakure, as a village with frequent rogue shinobi have an organized task force for such cases. But in the case of a shinobi with intel like Orochimaru, why on earth wouldn't they try to track him down?

Theory #1

"Orochimaru's alignment with Danzo and the root organization makes Danzo actively hinder the village from locating him, that's why they can't fight him."

Danzo having someone like Orochimaru as an ally would snowball into such a scandal, I imagine only his most brainwashed loyal soldiers would be aware of that union. I would think Danzo wants to keep it that way. Even if he is able to pull a few strings, he does not have as much impact over what missions get approved and what missions don't. I can imagine him bringing his men onto Orochimaru surveillance missions and killing other shinobi if they find relevant intel.

Theory #2

"Orochimarus hideouts are just too well hidden to be discovered."

I don't think so. His main hideout is in Otogakure, which is a small village. If several small teams are sent there to scout the area, they'd easily locate his hideouts and could find him sooner or later. Unlike Pain (reminder: he uses the rain to surveil Amegakure, where I think Akatsuki's main hideout is located), Orochimaru does not possess surveillance powers to look over the entire village. Locating him would be easier than locating Akatsuki.

Which brings me to my theory.

"Konoha is keeping Orochimaru alive because he's still useful."

Most, or dare I say all of biological research involves genes, or rather, a genetic sequence. Have you ever wondered how these sequences are stored? The answer is databanks. Huge databanks. For reference, the genomic raw data of one (1) human is 200 gigabytes large[1]. For reference, that's more storage than the entire Naruto shippuden series needs, fillers included[2]. If we add onto that a variant list with all possible mutations that people have, we can add 125 megabytes per person.

That amount of data requires quite some infrastructure and genetic know-how. If only there was someone with vast amounts of space, genetic know-how and heaps of genetic data to maintain such a databank... Oh wait.

I can imagine Orochimaru hosting such a databank where researches from all over the world can gain access to all the genetic data they need - against a small monthly fee. And the agreement to enter all data they generate to the databank for other researchers to use. Independent researchers, small research teams, schools, universities and other institutions, they all rely on that service for that research. Sure, some competitors do exist, but Orochimaru's databank is probably the most expansive, and more importantly, the most accessable. For a man who built his state on offering opportunities to the most unfortunate (Dosu, Kimimaro, Kabuto), you can bet he knows how crucial access to information is. He probably even has different subscriptions tiers for students, independent researchers and institutions so everyone can afford that service. He knows most people can't do as high level research as he can because they're bound by things like scientific ethics, so he doesn't see a problem sharing his research data freely. And the research organizations? They look the other way. They know the unethical roots of that research, but in a fast paced, profit oriented world, it's all they have. Just like in our world.

Apart from just data-bank hosting, I also think Orochimaru probably also runs a kind of service laboratory where private individuals and companies alike can send in tissue/blood/hair/saliva samples for sequencing. Non-essential and non-vital sequencing work is outsourced to his laboratory. It's costly, but still cheaper than running your own genetic sequencer. Orochimaru is able to negate the costs by adding the sequences to his own databank. People essentially PAY for their data to be added to his databank. (Which is exactly what companies like 23andme, ancestry and others are doing, btw.)

If the service is free, you're the product.

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