Will owning a business that sells illegal products in Thailand affect my DTV application in Hanoi?

You’re not doing business in Thailand. Your business is legal in the country it operates in.

Why would this be an issue?

I would say probably not.

The meaning behind all the approvals is yo make sure you are both a net positive influence over Thailand's economy and stability.

Seems you will qualify assuming rest of the financial documents are in order.

Distributing cancer-causing products for a living should not be tolerated. But unfortunately, as long as you have a registered company, payslips, and 500,000 THB, you should be fine. It still depends on the discretion of the officer reviewing your application.

If you apply as business owner ( like myself ) you will need to show your company’s real activities and of course the easiest way for me is to show proof (information and pictures) of 2-3 clients. So if I were you I would provide information of clients/ distributeurs outside of Thailand.

Keep in mind that their job is to make sure that you have enough income/money to spend in Thailand. And embassy officers are not customs or police :-)

I doubt they care as long as you are not doing business in Thailand.