I really love MXTX's narrative decision to have a character that is vital to the plot and then tell us NOTHING about him.
Who was the real Mo Xuan Yu?
An insane cutsleeve, we might say. But we don't actually know that. Most of what we're told about MXY is from other character's opinions and "common knowledge" but the main moral of the novel is that you can't trust either because public opinion is very easy to manipulate.
And we know Mo Xuanyu was at odds with an expert manipulator.
So, how much of it was true and how much was JGY ruining Mo Xuanyu's reputation to get him out of the way once he wasn't useful?
The only thing we have proof of is that, when he died, he was definitely mentally ill; it was evident from what he did and the writings he left. But, was he always like this? Or maybe the mistreatment at the hands of his family, or his contact with demonic cultivation (we don't know whether he practiced it before the ritual) eroded his mental health. Hell, by this point Jin Guangyao already knew how to use the songs of turmoil, who's to say he didn't do that to MXY for knowing too much.
Of him being a cutsleeve, there's no hard proof. Maybe the makeup, but that might be him just being theatrical. We don't know, it's Wei Wuxian who takes the rumors and runs with them full throttle. Though it is worth noting that the characters who knew MXY before don't seem to bat an eye when WWX is playing up the gayness, so there's that.
Him harrassing JGY is a complicated one. Because, again, no proof but the opinions of the people in Jinlintai, who may have been manipulated by Jiggy into believing that. We have seen the guy do worse, he's the king of Gaslight, Gatekeep, Girlboss. And if Mo Xuanyu was becoming an obstacle for knowing too much and refusing to cooperate... maybe it would look too suspicious for his newfound half-brother to mysteriously die, maybe he couldn't find a good excuse or scapegoat in time, or maybe JGY was planning to finish the job later, where MXY's death couldn't be connected to him. Either way, depriving him of any sympathy or credibility ensured no one would come asking questions if he disappeared. I wouldn't put it past him.
So, we really don't know anything concrete about him.
Which, if you ask me, is pretty harsh on him considering that without him the plot would be one paragraph long. "Good news! The Yiling Parriarch is dead!" And dead he stayed. The End.
Of course, from a meta perspective, why waste pages developing a character who is only there as a human McGuffin? Too complicated, let's just allude to his gayness to move the BL plot along and scrub any worldly connection he had. There, no loose threads. On with the story!