Generally there are two tendencies towards the presentation of homosexuality in this great Shakesperian comedy. Either it is downplayed, or much is made of it. The most obvious relationship that could be described as homosexual, is that of Sebastian and Antonio, who says, in Act II scene 1, to Sebastian:
But come what may, I do adore thee so
That danger shall seem sport, and I will go.
However, some productions treat this as a kind of brotherly love, whereas some openly portray it as a homosexual longing of an older man for a younger. Of course, this is not the only instance where homosexuality can be included. One of my favourite productions of this play is Trever Nunn's film version, with Imogen Stubbs and Helena Bonham-Carter, that includes such scenes as Orsino and the disguised Viola together pursuing manly activities and Orsino struggling against the rising attraction that he feels towards Cesario. Depending on the director, homosexuality can have a very overt presence in this play, or it can be barely repressed beneath the surface of respectability.
this would not be homosexuality if the duke knew that viola is a woman not a man.