Taylor was probably hired as the GM just because of his name. Came in soon after Gretzky got traded, the Kings were horrible from top to bottom, they weren't spending a ton of money, etc. I'm not saying Taylor was a great GM, but he had a few moments working in a different environment than what the NHL is today.
Taylor was the Kings GM 3 years after he retired. He was a player. Lombardi was more of an executive. He slowly went through the process before he ever got a GM job.
Just look at how many older Europeans the Kings drafted during Taylor's time. Visnovsky, Lilja, Kaberle, Pirnes, Bednar, Huet. That's because the Kings didn't have anything from the early 90's drafts, and when they started to build something in the farm system in the late 90's, whatever it was, they ended up trading it for Palffy. In the early 00's, the Kings were a playoff team, weren't a huge free agent player, and got some cheap veteran European talent, hoping it would work.
Two different worlds. Cap vs. no cap. Lombardi is management, Taylor is a player. Lombardi runs an organization from the ground up, Taylor was thrown into an almost impossible situation, for him or the Kings. I'm guessing if Lombardi got the Kings job in 1997, the Kings are probably about what the Sharks were back then. The Kings ended up sort of like that with Taylor anyway.
The cap allows a GM to actually be a GM, not just a guy handing out huge checks. Lombardi was the right GM at the right time. Now, a lot of things have had to go the Kings way for them to have gotten to this point. Lombardi's job may have been in trouble for a while there too.
I think a guy like Lombardi loves the challenge of the cap. He's a manager. He was doing the moneyball-ish thing in SJ as well. With the playing field more level, Lombardi has ended up right there at or near the top in terms of managing the cap.