The plain fact is that Sloan was anything but a "renaissance man" when it came to doing his job. Really, his employers allowed him to be a college coach with NBA players...and it worked for a long time. As I see it, there's no real point to trying to assign right or wrong to this one. Sloan was a successful despot for the Jazz in much the same way as Coach K has been for Duke (except for the titles). While we can all agree that this "isn't the way it works in the NBA," it was in fact the way it worked for the head coach of the Utah Jazz for a couple decades and with pretty good success. Time caught up with the Sloan/Jazz system. Is this a good thing or a bad thing? I say it's neither. As with many things in life, it just is.
I don't see that Utah has really been playing Sloan's preferred style of basketball since they get DWill. They're not a tough defensive team. They're 18th, 12th, and 19th on defense the past three seasons. I'd say he did adjust his playbook to his players. The team has really shed a lot of talent - Matthews and Brewer (their past 2 starting SGs), Boozer, Korver... Okur is gone (13 games this season), too.
I'm much less interested in your first paragraph than your second. Why did Williams believe that Sloan was no longer an optimal coach and was Williams right? I'm not trying to approach this from a blame perspective as much as I'm curious to understand whether and why the game of basketball -- the Xs and Os not the culture -- have changed in a way that makes Sloan's schemes less optimal given his personnel. I think you look past the record because as Denny mentioned there has been a talent outflow. I'd love to hear other coaches and players speak honestly about this, though you know that's never going to happen.
I think someone mentioned the other day that Sloan actually has always been a better offensive than defensive coach; or to restate, his teams have always performed better on the offensive end than the defensive end compared to the rest of the league, which would imply that he's on the whole more dedicated or fluent on that side of the court. I found that interesting given Sloan's reputation as a hard-nosed coach.