What few understand is that the concept of Indiana basketball as a historic power is essentially flawed. Take a look at their entire history- ALL of it- from the beginning until Knight arrived. You'll find two anomalous NCAA titles in 1940 and 1953, and virtually nothing else. Then came Knight, and for his first 16 years they were a power, going to 4 Final Fours and winning three titles.
Since then... 2 Final Fours and no titles in three decades.
Indiana's days as a national power are three decades in the past. Just like UCLA, they were a flash in the pan... and not nearly as bright.
There's a lot of truth to this. IU has more wins than any other Big 10 team, but they're 11th overall, and they actually have a worse winning % than Purdue and Illinois.
I think the main problem for IU is a combination of location, and the fact that they never nationalized their recruiting in any effective way. Bob Knight did not like recruiting, at all, but for the 1st 20 or so years of his IU tenure, when college basketball was much more regional than it is now, he could always count on getting decent, sometimes great, talent from Indiana and a few surrounding states.
Once Knight's time passed, there simply wasn't a lot for IU to sell, because it was always more about the man than the program. Now they're in a situation where they even have trouble keeping local (mainly meaning Indianapolis) kids, because there are a bunch of other options not particularly far away.
IU has never had a figure like Joe B. Hall, or Rick Pitino. Or for other good examples, Larry Brown and Roy Williams at Kansas. Those guys all expanded the reach of Kentucky and Kansas, so that it became sort of an ingrained thing that elite players, from anywhere in the country, would consider Kentucky and Kansas elite programs (Dean Smith and Krzyzewski did the same thing at UNC and Duke). For IU, it was all about Knight, and since then it's been Knight's shadow.