[Child of the 7th Age]

You have to remember that not even Gandalf, who was a Maia, understood what the Ring was for many years. Fifty-nine years passed between Bilbo's return from his adventure and his departure from Bag End (2942-3001 T.A.).

Gandalf was suspicious from the beginning, especially when he realized that Bilbo had lied about how he acquired the Ring. Gandalf also noted Bilbo's coninuing youthful appearance, but initially thought that was merely because his family was long-lived. In 2953, at the last meeting of the White Council, the group discussed the Rings, and Saruman told them the One Ring had gone down the Anduin and been lost in the Sea. After this, Saruman withdrew to Isengard and fortified it. According to HoMe, this was the first time Gandalf seriously thought about Bilbo's Ring.

Bilbo's strange behavior, his inabiliy to give up the Ring, put serious suspicion in Gandalf's mind. He spent the next 17 years searching for clues to confirm these suspicions. In 3018, he returned to the Shire to warn Frodo about the Ring, and the hobbit fled some five months later.

So if Gandalf took this long to figure out the Ring, it's no wonder that Bilbo had little idea of its power.