When we are introduced to Fredo in GF, he is somewhat inebriated while attempting to kiss Kay. Before that we see him in the don's office for the Bonasera "favor", but in the background. I would venture to say (as most have) that he was viewed by the don as a child who needed protection and one who could not be given a position of responsibility and power. As part of the family he weilded some power or respect, but definetly in a support role. A capo-adjutant or special assistant to the don.