Why were the people afraid of Moshe's rays of light?
Rashi: This demonstrates the destructive power of sin, inasmuch as before the sin of the Eigel, the Torah (24:17) describes how the Shechinah appeared on top of the Mountain like a consuming fire before the eyes of Yisrael, and they were not afraid and did not tremble, whereas now they were even afraid to look at the rays of light on Moshe's face! 1
Moshav Zekenim (citing R. Yeshayah): Because they thought that he was an angel, until he told them that he is a human-being, and the light is from the Shechinah.
Oznayim la'Torah: Nevertheless, whenever Moshe spoke with the people, he removed the mask and they were able to look at him - in keeping with the Gemara in Sotah, 21a 'Although a sin can extinguish a Mitzvah, it cannot extinguish Torah'.