Sure, on a practical standpoint, the KKK shouldn't be allowed to exist, and sure, they committed horrible acts.
But think on a legal standpoint. There is no "common sense" in the law, the limits must be well established and firm, there is no case-by-case, only rules that apply to everything.
So even if KKK is associated with murder and arson, you cannot simply ban anything and anyone under that name.. if an individual is caught committing murder or arson, he will be judged as such, but in itself, the KKK is "only" a group expressing their freedom of speech.