In their hearts and inner selves they knew what was going on at Dachau and elsewhere. It was the righteous indignation of US troops that forced them to deal with it up close and personal. Some commanders made the locals tour the camp. Some commanders made the local citizenry dig mass graves for the camps dead. More than a few locals after seeing what was done in their name killed themselves rather than have to deal with the shame and guilt. You’re right, they knew. But until the American troops arrived they did an awful good job of deceiving themselves.
CC
IIRC at the liberation of Buchenwald the G.I.’s dealt out rough justice, killing more than 100 black uniformed SS-men plus more than a few Nazis who had donned striped prisoner garb (and were quickly fingered by their former victims).
It took some time for officers to regain control of their men. No one was court-martialed, apparently.