“Though a devotee may perform sinful acts he is still considered proper (sādhu has the same meaning as sattva) because he accepts only the Lord as the object of worship. This is explained in BG 9.30 with api cet sudurācāraḥ sādhur eva sa mantavyaḥ. However, such a devotee with bad conduct is not mentioned when speaking of association of devotees (even though he is sādhu) because, by that association, bhakti does not suitably develop.
Thus Prahlāda says:
guru-śuśrūṣayā bhaktyā sarva-labdhārpaṇena ca
saṅgena sādhu-bhaktānām īśvarārādhanena ca
śraddhayā tat-kathāyāṁ ca kīrtanair guṇa-karmaṇām
One performs bhakti-yoga by service to guru, offering him all that one possesses, by association with devotees of good conduct, by worship of the Lord, by faith in topics of the Lord, by chanting about the Lord’s qualities and activities, by meditation on the Lord’s lotus feet, and by seeing the deity and making offerings to the deity. (SB 7.7.30-31)
In this verse the word sādhu means proper behavior.”
From Krama Sandarbha 11.11.29-32 by Srila Jiva Goswami