In a house where the primary social game has been to keep your head down and hope you fit into the right demographic, it's hard to fault Donny too much. He kept his head down.
Once he missed out on the one and only alliance, he may have preferred to float by as a ghost like Victoria, as the "harmless kindly old guy".
His biggest problem may have been his modesty. He wasn't just being nice, he meant to disarm people, but I don't think he expected to be mistaken for ex-military or a genius savant. Others see Donny differently than he sees himself.
He could have fared better in a stronger, bolder household, where his strengths ( skilled competitor, loyal, experienced) could have made him more of an ally than a threat.