People decided to short CDOs by noticing the base components of a CDO, which were a significant portion of highly leveraged debt, existing delinquencies that reinforced the peril of highly leveraged debt, probable delinquencies, and the high credit rating of the CDO itself.
These people either had solid information - like information of the CDO components - or they had probable information. Like the mortgage industry is probably overleveraged and this is the best product to get exposure to it.
So this answers both of your questions. CDOs didn't have the best transparency, some people had transparency, and some people inferred it from enough sources. It is also further important that only some people cared to look. Mortgages as a path to homeownership was seen as an industry that was untouchable by the business cycle, houses went up in price and nobody would readily agree with the contrarian view.