The Oracle says that the programs are invisible [to humans in the Matrix] when they are doing what they’re supposed to be doing. It is reasonable to assume that the Matrix system can "see" these invisible programs since they are functioning as intended. But if a program chooses exile, it has to first find itself a body or “shell” to host itself in so that it can blend in with everyone else in the Matrix. An exile is easily spotted by Agents as well as Neo since both can see the exile’s code that makes up the shell, but normal people enslaved inside of the Matrix only see another person. More importantly, the system wouldn't be able to spot these Exiles through the eyes of normal people in the Matrix. This is how a program “hides” - it disguises itself as a person.
But this wouldn’t be enough on its own. It is easy for Agents to spot an exile, and once they do, chances are good they will successfully kill it. That is where the Merovingian comes in. See Merovingian.
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