Goku mentions he can't sense Spopovich's Ki and that he follows Yakon in the dark via air currents (Instead of his Ki signature), so Babidi's magic hides the power of his goons.
Kaioshin was also really stressed because the whole universe was on the line and the Saiyans kept treating it as a game, and that affects your abilities (Including Ki sensing).
Yeh this makes a lot of sense. Although it doesn't explain why on the ship he was thinking something like "I can't believe there are people from the lower worlds stronger than me" - he should've realised that when Gohan went SSJ2, unless you think he was too distracted by trying to find Yamu/Spopovich.
Just noticed he does think "thinking about it, Gohan was so powerful back then" (I guess this is what Curtis is referring to, dunno if it means he felt the ki or just that his magic had a hard time) after Vegeta kills PuiPui (ch 450, pg5), so I guess he is aware of Gohan's Budokai ki - again though, I don't get why after he sees Goku use a powered up SSJ1 to kill Yakon he thinks the "lower worlds" thing, when he's already seen SSJ2 Gohan at the Budokai.
Tbf it does seem like Kaioshin is at least worse at sensing ki than Gohan. Chap 460 page 11 Gohan says an "incredible ki" is growing (before Buu appears) and Kaioshin is like "what ki?", so maybe the distraction of looking for Yamu/Spopovich could be enough to make him not notice how strong Gohan is, if he didn't even notice what someone as strong as Gohan called an "incredible ki". Or maybe if the "back then" comment on the ship is acknowledging Gohan's ki then he didn't sense Gohan's ki properly, but it's stored in his memory (like how humans can remember visuals or sounds they didn't fully notice at the time - maybe kaioshin can remember ki later on, even if he didn't recognise it at the time).