People don't understand Eastern concepts. They're still confused by the fish family of Kaido's fruit even though ryus are more related to fishes than reptiles, imagine how hard it must be for their narrow minds to conceptualize Luffy's Buddhahood-like awakening.
On top of that, I bet most of the "Luffy is possessed" gang were power scalers, who are a special breed of stupidity. They tend to lack sensibility to... pretty much everything, so imagine stuff beyond their immediate culture.