Actually 'polished' wasn't really a complaint for KQ8 back in the day... Most reviewers actually admitted it was polished (trying to compare it to newer games of today is like comparing apples to oranges), and it compared favorable more so than other polished games at the time such as Tomb Raider 3. It got overall better reviews than KQ7 (which most were saying was 'outdated', and that sierra should have let KQ quite when it was ahead (KQ6)). KQ8 was largely praised by the professionals. It even generally received higher ratings than Grim Fangdango received at the time...
You can blame the audience, most gamers were moving away from adventure games at the time, wanted more... Adventure Game community itself had become a niche. That niche wasn't enough to make the games worth making for the companies. Companies were about profit margin.
It also didn't help that Sierra was on its last fumes at the time... In its final years of collapse... and KQ8 was actually pretty much their best selling game, after Half-life (very little could touch Halflife)

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For comparison Gabriel Knight 3 only sold about a third of KQ8. QFG5 was pretty much just described 'failure' in sales (I haven't read if they released the number it sold or not)... As far as Sierra was concerned that wasn't a success... From an adventure game developers perspective that didn't see the kind of sales that other genres were receicing, 300,000 only seemed like a lot to Jane Jensen. But Tomb Raider (for example, as a popular franchise back them) was easily selling around a million copies per game back then!
Doom and Halflife? FPS shooters probably easily much more than that. Companies were about the bottom line, and public demand... They wanted to make what the public wanted... Niches were not the direction to look. That's why companies left adventures in the dust, and genre basically 'died'. It's still alive in the niche market, and somewhat in the 'casual' gamer market now, but its nowhere near as successful as any Call of Duty or Deus Ex type franchises!