Yes, H.L. Mencken was racist because he wrote a diary that revealed racist and anti-Semitic comments. Mencken's diary revealed that he felt superior to Blacks and showed a negative attitude toward Jews. According to an article in the Los Angeles Times, in September 1943, Mencken wrote this about Blacks: "It is impossible to talk anything resembling discretion or judgment to a colored woman. They are all essentially child-like, and even hard experience does not teach them anything."
Yes, in his time most of the United States of America was racist or held some racist view. At that time people were still drinking from different water fountains and going to different schools. He may have changed his views as most Americans did after the progression in the civil rights movement.
While his work as a professional journalist centered on satire and social commentary, his published "secret diary" reveals elitist and racist attitudes towards African-Americans and Jews in his community of Baltimore. In "The Diary of H.L. Mencken", the author writes sweeping generalizations and promotes a system of hierarchy within communities that encourages some to be inherently better or more distinguished than others.
Mencken was a racist in the same way that the USA was a racist country. Mencken moderated his views in line with the changes in American society until his death in 1956.
The H.L. Mencken Club, as described in the Village Voice article, is certainly racist and politically reactionary, and their dedication to the letter of Mencken's antiquated views might well qualify them as a hate group.
If you can look past Mencken's ignorant, uncivilized views, his writing can often be fascinating, and his willingness to puncture people's balloons is refreshing.