Here is my humble opinion.
Father Flynn is indeed a homosexual. I believe this, coupled with Flynn's recognition of Donald's own sexual tendencies is what inspired Flynn to look out for the boy. I also believe that something similar to the accusations of Aloysius also happened to Flynn in his childhood (ie that he was molested by a priest), and that the priest responsible was acquitted and the blame was placed upon the young Flynn. Perhaps the young Flynn had not attempted to sever this relationship out of fear of punishment or simply because he was in need of a compassionate male figure in his life, regardless of the priest's sinister motives. Either out of anger or revenge to the church, Flynn vented his indignity by having an inappropriate relationship with a child at one of this former parishes, able to justify his actions to himself by reasoning that the child also needed a male role model. After being booted from the parish and realizing his mistake, I think that his shame and regret of his actions instilled within Flynn the desire to promote kindness and compassion within the church. The movie mentioned three former parishes where Flynn had worked. I think that the first parish had learned of his childhood indiscretions and the subsequent responsibility placed upon the boy, and was therefore thrown out and transferred to another parish where he committed the pedophilia, was outed by a nun who knew of the relationship, and was then of course transferred to the present parish. His resignation at the end of the movie was not an admission of guilt to Aloysius' accusations, but rather an admittance to his former indiscretions. I do not believe that Flynn had an inappropriate relationship with Donald in any way.
The evidence I use to support my theory comes from Flynn asking Aloysius about her past mistakes and his refusal to divulge any information on his past experiences at the other parishes. And there was also Mrs. Miller's statement to Aloysius that "maybe some of them boys wanna get caught."
