Consider this: "sixty-nine" is clearly 69. But when spoken out, especially in a long string of digits (like an IBAN, a banking code) that might be announced as "six, nine" or "sixty-nine" or "sixty...nine" or even "six...ty-nine".
So even in English there's some chance of ambiguity whether it is supposed to be 6-9 or 6-0-9 (consider: "forty-two, sixty, nine" for 4-2-6-0-9).
In German the awkward inversion makes this worse. So you might get "neunundsechzig" (6-9), "neun...undsechzig" (9... no, wait, 6-9? or maybe 9-6-0?) or "neunund...sechzig" (...6-9). Although the last one is unambiguous, you're basically stuck waiting for the end because you're trying to write digits down left to right and don't want to skip digits and backtrack.
As for why "neun...und sechzig" is ambiguous: with that weird pause it's not clear if this is still 69 or literally "9 and 60" (which is what the word "neunundsechzig" means), i.e. 9-60. As people sometimes emphasise the final digit or digit pair by saying "and" before it (like you would in a list of words), this is ambiguous and at least might give a listener pause.
"Hundert" and "und" generally aren't similar enough for this to be a problem and there's a special place in hell for people who read out groups of digits longer than 2 as numbers, so this isn't generally a problem. Most people do however tend to slur the "und" so e.g. "sechsundsechzig" becomes "sechsnsechzig" but this rather avoids the problem I mentioned (except for the backtracking).
9 und 60 vs. 9 hundert 60, if you speak quickly then the "ert" part of hundert is often swallowed, making it more difficult to discern between the remaining "hund" and "und".
The closest I can get to ambiguity by slurring "neunhundertsechzig" is "neun oder sechzig" or "neun, neununsechzig", never "neunundsechzig", and I have to make an effort to speak faster than I normally would even if I was reading out numbers in a hurry. I've also never run into this ("hundert" and "und" being mixed up) in my daily life, so I'm surprised to hear that this is something you hear often.