A lot of our guys looked like defeated players here at the time. Which takes us back to the original question: what went wrong? Probably some combination of awful coaching, entitled players, injuries, poor roster management, and bad luck. I'm just not convinced it was inevitable.
I'm sure it wasn't inevitable. I think the result was a combination of:
a) Locker room issues, as everybody pointed out.
b) Very poor coach choices by Murray. It took the guy 4 tries to finally find a good coach. In retrospect, it was probably a huge mistake to fire Paddock midway through the season too. Sent the message that the coach was to blame and that it wasn't the players' fault. As well, it may have exacerbated the problem of players not listening to the coaches (if the rumors are true). Back then though, I was elated when Paddock was fired.
c) Poor pro scouting/roster management. Sure, the players that Murray got rid of didn't do much after leaving the Sens, but Murray never found proper replacements for the roles that those players filled.
d) Lack of foresight/cap management (tied to c). Murray was really a very conservative GM, and was more reactive than proactive. He didn't get rid of one of Gerber/Emery after the Cup run, leading to the massive controversy the next season. As well, he really never traded anybody while their value was high. Emery ended up being bought out. Heatley was traded for Michalek and not much else. Don't forget that Murray was the one who handed all the big extensions (Heatley, Spezza, Alfredsson, Fisher). He could've made some bold trades after the Cup run if he wanted to (ala the Blackhawks after winning the Cup a couple years ago), but he played it ultra-conservative and just tinkered around with depth players.
e) Barren prospect pool.
f) Injuries and decline. Heatley got injured and regressed. Alfie and Phillips got older. Redden regressed even more.
Anyways, I'd just like to finish by saying that I've been a huge fan of everything Bryan Murray has done after the Dany Heatley trade. He's done an absolutely magnificent job of refilling the prospect pool. That said, I still think he deserves at least some blame for the team falling apart past the Cup run.
Also, I'm done talking about this. This horse has long been beaten to death.