Your summary ignores much of the nuance of the article, such as the fact X claims to have a "zero-tolerance policy" for non-consensual nudity images, or that Grok refused to generate similar images with actual literal direct prompting.

So that's the cause of the outrage. Non-consensual nudity is immoral, it violates X's own policies, and they're trying to prevent it - but they did a very poor job of it.