Was she plain incompetent?

Was she placed for PR reasons but set up to fail?

Has the US lost so much goodwill, success was impossible in the first place?

Some combination of those are a big part of it but from outside Bush's inner circle it is hard to say which. In particular her handling of the Israel/Hezbollah war, where the US dithered around saying they where for peace but only on Israel's terms until it was clear that Israel was loosing. That badly hurt her credibility, but I suspect she was restrained by pro-war and pro-Israel forces at the top.

Was she liked by the Bush inner circle but undermined after policy disagreements?

She has been part of Bush's inner circle for some time. But apparently since becoming head of the State Department, she has been taking some positions against Cheney. And that is a loosing bet with this government.

It probably also hurts her that international negotiations rarely lead to simple win/loose action. Bush strikes me as the sort who is drawn to war in part because they are straightforward and decisive.

It has also been part of Cheney's policy from the start to undermine the State Department. Cheney and Rumsfeld and those around them have long worked to increase the power of the military at the expense of civilian command.

Jay