I read most, but not all of the replies, so if I am repeating something I didn't read I apologize... but I didn't see an important reason mentioned...
First, yeah - the first impression of it was not great for a lot of buyers. They thought it was going to be the bees knees, and it simply wasn't. This was brought up.
What I didn't see brought up was the build up to it's release was both during the "post Tron LE, the LEs must be worth a mint!" time, and it was hyped to the point that no matter how amazing the first version of the game was, I don't think that people would have liked it enough. X-Men is *the* game that started the whole $10k by Christmas thing, as there were certain "insiders" saying that it was going to be such an incredible game that buying an LE was pretty much a guaranteed $10k by Christmas sale if you wanted it, so why not? A TON of the initial investors in the game were pure speculators that thought they were going to easily double their money on it.
But not just was the initial game code weak, the market had a bunch of people who bought with the intention to flip. The combo of those two things drove the price down quickly - when it was discovered the code wasn't too strong, those who bought to flip tried quickly flipping for a profit or to get their money back and the market cratered.
After a few months, many people who bought the game decided it was time to sell because the code hadn't improved how they had been hoping it would. Often, these people took a pretty sizable loss and therefore badmouthed the game.
The code eventually did get awesome, but the early damage had been done and many people don't care to go back to it again.
I will say that I think the Magneto version in particular is one of the best looking pins out there, and if you set it up really hard, it is a super fun game to play. It's one of the few games that I had and sold, but that was strictly due to someone offering me a deal I couldn't turn down because he wanted my specific game, and it's one I could totally see myself owning again in the future.