So I was in Junktown, and that casino owner guy asked me to kill the store owner. I said no. He attacks me. I survive and kill him. Now the game says I escaped from jail and the guards all try to kill me. What gives? They said as long as its self-defense, it's fine, and thats what it was.
Bug? Guards in other towns have red text now but arent killing me. How do I fix this?

No idea.. But! I usually speak with the store owner first. Why don't you try that? Assuming you have a savegame from before that...

I did talk to him before that and bought plenty of things. Now he tries to kill me on sight.

Didn't some guy come in and try to kill him afterwards? Then you should get an option to help him get Gizmo out of Junktown. You then need to pretend you agree to kill....... Killian I think it was, but instead give the evidence you have gathered while talking to Gizmo.

Well justice is not the same as being fair (reminds me of real life?). The guards probably wanted to jail you for shooting someone, or simply waving a gun around. Different towns have different rules, so you might want to listen to the guards when you enter a town.
You can accept the quest to kill Killian from Gizmo and then tell Killian that he tried to give you this quest. This is quite a normal approach in Fallout it seems, accepting a "bad" quest and turning it into something "good". Another way is as Azarr says to at least get one shot in when an assasin enters the door at Killian's shop. Not sure if this assasin arrives if you spoke to Gizmo first...

To avoid this you are meant to agree to kill the store owner (Killian) and if you are trying to be good, don't kill him (but still agree to kill him), instead talk to Killian and say Gizmo is trying to kill him

Take your own advice. They say when you enter the town that you can use a gun in self defense, and thats what I did. I was shot before I even equipped a gun. This is a bug in the game.

Not really. Just how they did it.
Anyway, Gizmo may not be popular, but I think his casino is, you kill and they have no proof that he needed kicking out anyway. So anyway, you kill the local casino owner and his bodyguard, no proof it was self defense anyway. To them looks like you attacked first. how could they know who shot first? Your word? Sorry, boss.

It's not a bug in the game, it's just the way the post-apocalyptic world works. You're just some asshole that wandered in out of the desert. Until you prove otherwise, you usually aren't worth shit to people from a town compared to anyone who lives in that town, even if you're good and they're evil.
You can usally only break this "rule" when you're following quest instructions.
But most of the time, you can't attack anyone in a town without turning the entire town against you. If they attack you first, it's usually not considered self defense on your part, because you must have provoked them. Usually in a "town" no one will attack you first unless you do something to trigger their hostility. This is different from "monsters" like Radscorpions, which will generally attack as soon as they see you.
The game probably figures you "attacked" Gizmo by refusing the job. It's almost like you tried to steal from him and failed, which often turns people hostile. Since your action triggered Gizmo's hostility, it's all considered your fault by the game engine and the town.
I imagine that from a programming standpoint, you're going down the same path if you piss someone off by stealing, shooting at them, or making them hositle through dialogue.
Junktown is a bit tougher than some other places because "Mayor MacGyver" is such a tight-ass. (The store owner Killian Darkwater is voiced by Richard Dean Anderson, star of MacGyver, Stargate, etc.) He wants to clean up his town, but everything has to be on the up-and-up. Basically, you have to be pretty careful to follow the "script" in Junktown, or everyone get's pissed at you. I took me a few tries to get it right, and I actually gave up on one the quests in the town because I couldn't figure out how to finish it without everyone going aggro.
There are a few towns in Fallout 1 & 2 where you can kill a merchant-type guy and steal all his stuff and no one else in the town will care. Because they all think he's a bag of dicks. That's a great way to get loot, if you can figure out who everyone important hates.

Well, I had a similar problem.
First time in Junktown, i go to the store, im at the shop, buy stuff, close the talking window, and a guy comes in and says 'Greetings from Gizmo' or something like that, and opens fire on him. Me, the guards, and my companion whom i picked up in shady sands, managed to take him down, and i was thanked and everything.
Though when i went to Gizmo, he asked me to kill the sheriff guy, and i said no, so we fought and i killed him, though instead of becoming wanted they jsut banished me from the town for good. All the other towns though, kept the same tect. No one had red text for me.
Instead of just avoiding junktown from then on, jsut got mad, cause it's a great place for...well, everything! So, I went in with my bud (note, this is while im still quite a low level, dont know how i did it!) and killed everyone, and then i had free ammo!
Not exactly a good choice, but a choice nontheless.

I also got into a fight the first time I talked to Gizmo. I either blew it on the dialouge choices or got caught trying to plant the bug. The battle was hilarious, because Dogmeat struck the killing blow on Gizmo while Ian and I were working over the bodyguard (who seemed like more of a threat in combat. It looked like Dogmeat was bashing his way through the desk in order to rip out Gizmo's junk.
But when I realized that Richard Dean Anderson didn't like me anymore, I said "Frack this, time to Re-load and try again." My save point was right before I went into the Casino, so not much time lost.
The way to think of it is, you're the undercover cop. You're job is to get the bad guys to admit to their evil plans, but then you have to get out with the evidence without starting a fight. You're not allowed to say "A-ha, suck on my SMG, evil-doer!" and open fire as soon as you manage to piss the bad guys off.
You have to wait like three whole minutes to shoot them. After you report to the good guys, you immediately get the chance to teleport back and join in on the shoot-out. Now, not only do you have back-up for the fight, but the bad guys start shooting at MacGyver first! Suckers! And the good guys don't even want a share of the loot from the bodies after they help you blow away Gizmo and his bodyguard.
That's what you call an optimal outcome.

during the fight, you didn't happen to accidently hit any of the casino patrons, or any junktown guards, did you? if so, that'd be why the junktown guards are hostile towards you. i don't think there's anything you can do about it now.
the red text from other guards is probably related to your karma level. i'll bet that the events in junktown lowered your karma, and guards of other towns will naturally dislike anyone with a low karma. word travels fast in the wasteland.

you're talking about iguana bob, then? i believe that's intentional. if you get in a fight with bob, no matter who started it, the guards will take his side.

It's not a flaw, I remember I walked into town with a rifle (first time around a spear) in hand and the guards immediately shot me. The best thing you can do is just get the hell out of Junktown and forget about it. And just FYI for future escapedes into towns, put your weapon away (except for the Boneyard, Necroplis, Glow and a certain the west section of the Hub). Good luck bro!