Why was Dylan never told the truth about his father?
Dylan discovered the truth about his father only by chance, years after his "death". Sure, it was unwise to reveal it to Dylan shortly afterwards, Jack's enemies might have been watching him - he had to look mourning his father genuinely. But after some time, say several months after the dust has settled, why not inform him the truth?
I think telling Dylan the truth could have made things different for him and others. Perhaps the belief that his father was dead, made him (subconsciously?) act in the following seasons, most notably season 4, in such way that alienated Kelly and his other friends - he wouldn't let anyone get too close to him because he feared to get emotionally hurt. It would have also saved him a lot of pain resulting from Toni's death.