Milan had a very good team that year in terms of quality - hence their winning the CL - but not in terms of depth, which, along with the departures of Sheva, Stam, and Cafu being constantly unavailable due to injuries, and lack of investments by Berlusconi, made it obvious to everybody that they had to choose between Serie A and CL.
Add to that the Calciopoli credit Inter was enjoying from the refs, the money Moratti was poring into Inter (i.e. Ibra), it didn't take a math degree to figure out the obvious outcome of a simple calculation - focus on CL, while in serie A do just enough to qualify in the top 4.
All in all, Milan had a very good set of 11-12 players, which was enough - bar any injuries - to do well in the CL, but not enough to perform consistently at a high level between Serie A and CL games.
As for Milan not winning the CL w/o Kaka, the same could be said about Pirlo, Gattuso, Seedorf, Maldini, Nesta and especially Inzaghi, so ... in the of the day, no player is bigger than his team
oh, and did I mention
Fuck Barca!