It was previously called non-A non-B hepatitis, and was first diagnosed as such in 1975. (probably contracted several years prior) The virus wasn't discovered until 1989, and then it was renamed hepatitis C. It is not know exactly when the virus began infecting humans because it is asymptomatic in many cases, until the damage is already done. Sometimes a person can contract the virus and remain healthy for 25 years before becoming sick. The virus works by slowly damaging the liver, building scar tissue, which will eventually prevent the liver from functioning. Transplants can be used to prolong life, but the new liver will eventually become infected and damaged as well.
As for a connection to homosexual bath houses, I don't know of any. Obviously, because it is spread through bodily fluids and blood products, it can be spread through homosexual sex, like HIV. However, because blood products were not screened until 1992, most cases came from transfusions. It is sometimes mentioned with HIV because some are infected with both, and because they are both treated with antivirals. There is no known component of homosexual behavior in the history of the virus.
The new treatments developed using protocols similar to HIV, are effective in some, less so in others. The ongoing HIV research does provide much information to those treating Hep C. There is also a lot of Hep C research going on too. This is important because of the high rate of infection. Rates in Japan are substantially higher than in the US.
That is what I know about the disease history. It is a very different disease than HIV and isn't a reflection of sexual behavior.
Thanks for your comments. I just did a little googling and found these articles (in case you or anyone is interested).
http://www.hcvadvocate.org/hcsp/articles/Donovan-1.html
http://www.hepc.nhs.uk/information/faq.html
http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/hepatitis/index.html
I still say that spending vast quantities of money on HIV when it is the easiest disease in the world to avoid is political pandering.