Unfortunately, the answer is pretty simple: to women, a man with kids says "stability." For many single guys, however, a woman with kids makes them think "baggage." That said, this is a bit of a generalization. To a single person not ready to settle down, kids are baggage period. Doesn't matter if you're male or female-- once the childless person you're interested in realizes you have kids, they're going to assume (perhaps wrongly) that you're looking for a serious commitment.

Women look at single men with kids and see someone who has experience raising a family. They don't just see a potential dad, they see an actual dad. Believe it or not, men also feel this way about single moms. The decent guys out there will admire you and have the utmost respect for the sacrifices you've made raising a kid (or kids) on your own. Whether or not they want to date you depends on both the usual stuff (attraction, chemistry, timing) and whether they're ready for that type of potential responsibility.

You can't really judge someone for thinking twice before getting involved with a single mom or dad. All sorts of thoughts come into play: Will the kids like me, or will they see me as poor substitute for mom and dad? Am I ready to take on the responsibility of someone else's kids should the relationship get serious? These fears are not exclusive to men. 

Also, whether or not the kids live in the same house doesn't really make a difference. For one, you're assuming that single dads don't live with their kids, which seems unfair. (Plenty of single fathers have either joint or full custody of their rugrats.) Regardless, if the guy's kids are in his life at all, they're going to be a factor in his dating life just as they would be in yours.

Stop worrying about what happens to other people. Plenty of single moms find a good man, get married and live happily ever after. (Mine eventually did. Happy stepfather's day!) If you aren't getting dates, it's probably due to a lack of self-confidence and poor choices in men. Are you dating younger men? Probably not a good idea. Look for someone around your age, or older. Consider divorced men, or men who have been in long-term relationships. Don't be afraid to date as much as possible and make mistakes until you find the right person. Naturally your kids are going to be part of the equation, but you still have to have a connection with someone and fall in love and all that good stuff. Stay strong! It may take a little while, but he's out there.