The first reason was the hardware; in the year 2000, the hardware was not capable enough to execute such a complex system
I wonder if there is some source for this. People were able to run SQL servers in 2000 without much of a problem, it didn't need a mainframe to run a DB that fit on a consumer HDD.WinFS was no longer required due to market changes, beyond any engineering challenges. There was no need for WinFS when cloud storage came along, aka SkyDrive.