The majority of their draft picks were actually decent, and most of their free agents were solid. Granted, not many Pro-Bowlers, but that's mostly a combination of bad luck and unfortunate draft scenarios (Alex Smith, Kentwan Balmer, Brandon Williams all sound horrible...but who were the realistic alternatives back then?).
So then what's the problem? The problem is this: an NFL team's success is disproportionately impacted by its QB. That one single position hugely affects the overall fate of the team. The playoff teams usually have the best QBs. It's neither insignificantly coincidental nor is it insignificantly obvious. It is THE significant factor.
The biggest mistake by McCloughan (and Nolan) was stubbornly refusing to hedge their bets against Alex. Whether it was fear of criticism for giving up too early on their #1, or fear of disrupting Alex's confidence. Whatever the reason, the result was that it took a crash-and-burn season (2007) for them to finally realize that maybe they needed to finally start seeking other options at QB. But by then, their single-most-important position was in utter shambles and all the peripheral draft picks and free-agents ultimately didn't matter.
In the modern-day NFL of musical-chair free agency and coaching changes, you need to have a solid QB, first and foremost. With the Niners, they've neglected to upgrade that most-important QB position for the past 5 years. The last solid Niner QB was Jeff Garcia. That was also the last time they made the playoffs. Coincidence?
Maybe Alex can bounce back to become a solid QB, but I'm hoping the Niners hedge their bets this time, and spend some significant resources to upgrade their most important position.