WARNING: The following contains spoilers for Boruto: Naruto Next Generations Episode 180, "The Assassin, Mugino," now streaming on Crunchyroll.
In the Naruto series, as much as Konoha's ninjas are the protagonists of the story, some of them leave a lot to be desired. Tobirama, for example, wasn't as kind a Hokage as Hashirama, stirring up a lot of discontent with the Uchiha clan. It made the latter exiles in their own village and that outsider mentality is what put Shisui and Itachi down dark paths as they struggled to choose between their own and what was right.
Now, the latest Boruto episode brings back Tobirama's successor to the fray in Lord Third, Hiruzen Sarutobi, but it doesn't make up for past sins -- a lot of which he must account for as well.
Admittedly, Hiruzen inherited a lot of drama from Tobirama, who didn't follow Hashirama's lead as much. Hashirama was keen on making Madara's people part of the Leaf Village, but Tobirama considered them threats and perpetuated a flawed system. It was made even worse that other nations felt like war was the best option, thus pushing Tobirama to craft a legacy based more on its military than anything else, leaving a cold era for Hiruzen to balance things off of; making choices he's always regretted.
This made him a complicated leader and as such, Danzo would plot to take over, seeing Hiruzen as weak. All this also led to Orochimaru waging war on Hiruzen's rulership as the leader made Konoha into a powerhouse that could be used as a destroyer. What makes it even worse is that while Hiruzen did want to look after Naruto and Sasuke (both orphans) him commissioning Itachi to wipe the Uchihas out made them almost destroy each other. He also continued the trend of children as war soldiers, which was a blight since Kakashi's time and Shisui's as well. Ninja like them were suffering PTSD, killing themselves, and even turning on Konoha, as they didn't believe it was a place that stood for justice anymore.
This created even more enemies, as seen with the Akatsuki kids, yet Hiruzen didn't do much to stop it. It's why Mugino's flashbacks in Episode 180 of Boruto, which try to paint him as a sympathetic figure, feel like hypocrisy. Here, Mugino reveals Hiruzen offered him asylum, along with so many other people, as he didn't want kids to become soldiers, but it conflicts with the genocidal mentality under the surface.
When Mugino tried to assassinate Hiruzen, the Hokage hugged him and wished children didn't become death tools. But all this went against Hiruzen using prodigies in the field. We appreciate the sentiment but while Hiruzen sheds tears with Mugino, admitting children are the future, he knows he's part of the problem. That's why, when he allows Mugino to stab him, it's not just to fake out Mugino's spying bosses -- it's to feel the pain he inflicted on so many others by refusing to take Konoha out of the game, robbing teens of their innocence.
Even as he saves Mugino's soul, he's condemned others to death and this guilt, as well as Hiruzen's many sins, just can't be forgotten.