Firstly, I think that the remarks of Bishop Williamson should not be mistaken for some widespread belief within Catholicism that the Holocaust didn't exist. The very fact that Williamson and the entire Lefebrvists faction were only recently reinstated (and I don't think that they should have been) demonstrates how far outside the mainstream of Catholic thought they are.
Secondly, I am no defender of the hierarchy but it is entirely possible that they were unaware of Williamson's stance. They are kept in an incredible bubble. Beyond that, the reason that the Lefebrvists were excommunicated had nothing to do with their stance on the Holocaust and everything to do with their stance on the authority of the Pope post Vatican II, and it is likely those are the issues that the Vatican were focusing on.
There is no defending Williamson's actions but focusing on Williamson's Holocaust-denial kind of misses the whole point of this event and why most Catholics should be upset about it. At a time when Catholic reformers on the Left are being treated poorly, the Vatican determined to reinstate a sect that denies the authority of the Pope (see Michael Sean Winters recent article in Slate about the subject: http://www.slate.com/id/2210151/)
And that is how Williamson's remarks need to be understood - in terms of internal Catholic Church politics, whereby traditionalists who seek to undo the reforms of Vatican II wish to revert to an old order. I suspect Williamson's anti-semitism comes from the same place as his traditionalism.