This is a sticky one to discuss. In the case of the man living with his father's wife (note it is not his mother but his father's wife), Paul says that we apply a different standard to those who are in the church than we do to those who are outside the church. If we are required to not associate with immoral people we would have no one to associate with (including ourselves) and would never have the opportunity to present the Gospel to non Christians. (Jesus says to live in the world but to not be "of" the world -- that is worldly). It is not appropriate to apply or to expect Christian ethical behavioral standards to people who do not profess to be Christians.
However, he goes on to say, we must apply these higher expectations to ourselves and to those who profess to be Christians. We usually apply this standard to the question of leadership. Although the worshipping community called the church is open and available to any and all who seek to come, leadership in the church is necessarily reserved for those who are professing and practicing followers of Jesus. I am reminded that on any given Sunday my gathered congregation includes committed followers of Jesus, loosely committed followers of Jesus, and many who are uncommitted.
I worry when I read research that indicates that, for the most part, the behavior of people inside the church is not all that different from the behavior of people outside the church. And then I remember this passage in Paul and am reminded that it was not so different in the early years. But that historical understanding is no excuse. We have to set a higher standard for ourselves and we have to strive to live up to them. And, when we fail, we get up and keep trying.