To put it in colloquial terms, Boo Radley is grossly misunderstood, and he is seen as the weird guy in the Finches' neighborhood. In this neighborhood, telling "Boo Radley" stories becomes the equivalent of telling ghost stories in other places. They are designed to frighten the listener. The analogy of ghost stories is particularly applicable since Boo is referred to as a "malevolent phantom".
First off, there's a town legend that Boo stabbed his father in the leg with a pair of scissors. This story, while never actually verified to be true, has put the fear of Boo into all the neighborhood kids, to the point that they run, rather than walk, past the Radley household. Speaking of hurting his family members, Boo is also rumored to have bitten off his mother's finger.
Then there's the account Jem Finch gives anyone who will listen of what Boo looks like. If you take Jem's word for it, Boo's hands are bloodstained as a result of his diet of raw squirrel and cat meat, and he is an eye-popping drooling monster with rotten teeth and a scar that takes over most of his face.
Other crazy rumors about Boo is that he killed his neighbors' pets, and if that wasn't enough, Walter Jr will tell anyone who'll listen that Boo tried to poison him.
In a nutshell, if anything gets stolen or anyone is hurt mysteriously around the neighborhood, the blame lands at the feet of the kind, innocent Boo Radley.