Lombardi was a second-class (or tier) GM in his tenure with the Sharks. He assembled a solid team, but had a few key flaws that essentially became his downfall. From what I am able to recall, his weakness was with holdouts. He could assemble a great team on the ice and on its the farm, but he had an abhorrence of signing players on time if it meant he would over pay them even in the slightest--and this was in the pre-cap era. Around the time of his firing there was even a rumor that he would take bets on how long he would hold out on his RFA.The new ownership almost certainly have had a impact with holdouts as has been mentioned (money, money, money), but in the end a GM has to find a way to work with his players and Lombardi didn't do that.
At the same time the NHL was full of players that were holding out during his reign as GM; looking back at it he may have been just caught in the cross-fire, but in his case the cross-fire got him. That is why he eventually was placed on the chopping block. Certainly his candor (as mentioned in the Purdy article) didn't help though. Through his experience with Philadelphia and being given a second chance in Los Angeles (which was going to happen, someone who can assemble a team like he did was not just going to fade away) he elevated himself into becoming a top-tier GM, much like his mentors Bill Torrey and Lou Lamoriello.
I think his comment about the Sharks of '03 can now be a comment about himself as well, "When you're rounding third and find you can't get to home plate, sometimes you have to take a step back and return to second base." He was fired from the Sharks, took a step back for a while and finally got a Cup with LA--almost certainly one of more to come.