I think Forest were at their best in 77/78. They thoroughly deserved to win the league that year. But Liverpool's defence of the European Cup was impressive. A 6-3 aggregate victory over Dresden, having been two down early in the second half of the first leg; 6-2 (agg) against Benfica then 4-2 against a strong Borussia Monchengladbach in the semi-final. Finalists Bruges were admittedly not that good. It was only the third time an English team had won the European Cup and Liverpool had won it twice in a row. At the time this was considered a greater achievement than Nottingham Forest's title, bearing in mind that Forest were the twelfth different club to win the English First Division during the previous twenty seasons. 78/79 is trickier. Liverpool were eight points clear of Forest in the league, with nine more wins and a goal difference of +69 compared with Forest's +35. But as you say Forest (unseeded) knocked Liverpool out of the European Cup in the first round. Seeing that his players looked nervous before the second leg at Anfield, Clough ordered them to the hotel bar for several drinks and a sleep before the evening kick-off. Shilton was outstanding as they got a 0-0 draw and went through. Forest did not face another strong side apart from Cologne in the semi-finals, when despite a couple of rare Shilton errors, they won 4-3 on aggregate. Their other opponents were AEK Athens, Grasshoppers Zurich and Malmo. The final against the Swedes was such a poor game that World Soccer magazine questioned whether the days of the European Cup might be numbered. Not necessarily all Forest's fault of course, but were they now the strongest club in Europe? I think it is doubtful.
Instead of talking about a specific year, we can talk about teams with a certain trajectory over time. On the one hand, there are the teams that were dominant in their national leagues but could not win the highest continental competition: Juventus 1972-78 They won 5 leagues and were runners-up twice. In Europe they won the 1977 Uefa Cup, reached the semifinals of the 1978 European Cup and even reached the final of the European Cup in 1973 but lost to Cruyff's Ajax 0-1. Borussia Mönchengladbach 1970-77 In those 8 years they won 5 German Bundesligas leaving the other 3 to the great Bayern of Franz Beckenbauer. In Europe they won the Uefa Cup in 1975 and were runners-up in 1973. In the European Cup they lost the 1977 final against Liverpool by 1-3. Even if we go beyond 1977 in Europe they continued to have good results; the semifinals of 1978 in the European Cup, the Uefa Cup won in 1979 and the final lost in this same competition in 1980. That is, they were a very competitive team in Europe and Germany but they never managed to win the top continental competition. Bayern Munich 1980-90 In these 11 seasons the Bavarians won 7 Bundesligas but never managed to be European champions. His best results in this competition were the semi-finals of 1981 and 1990 and the finals of 1982 (loss to Aston Villa by 0-1) and 1987 (loss to Porto by 1-2). And that several of its players were part of the German National Team that had such good results in that decade as they won the Euro-80 and the World Cup-90 being runners-up in the World Cup in 1982 and 1986 but still did not manage to lift the Cup of Club Europe. Real Madrid 1986-90 The team known as “La Quinta del Buitre” won 5 leagues in a row but did not even manage to reach a final of the top European competition, remaining in the semifinals consecutively on 3 occasions in the period 1987-89. In the Uefa Cup they did triumph, winning the 1986 edition (previously Real Madrid had also won the 1985 edition). Juventus 2012-20 This team has achieved an incredible record in the major European leagues by winning Serie A 9 times in a row. It is true that it has not been the best time for Italian football, but even so we are talking about an outstanding record. Well, despite its dominance in Italy, Juventus has not managed to prevail in the top European competition, having its best results in 2015 when it lost the final against FC Barcelona 1-3 and in 2017 when it lost the final again by 1 -4 against Real Madrid. Of these teams for me the best were Borussia Mönchengladbach and Real Madrid. On the other hand, there are teams that did not dominate their national championships like the teams we have already talked about but that due to their level of play could well have won a European Cup as an example: FC Barcelona 1958-62 They lost the final of the 1961 European Cup against Benfica by 2-3 but in the Spanish League they managed to win the championship twice against Real Madrid of the 5 consecutive European Cups. Also in 1958 and 1960 they won the Fairs Cup being runners-up in 1961. Anderlecht 1976-84 This team has a curious behavior during this period. In his country he only manages to win one League and one Cup but in Europe they play 7 finals winning 5 of them (Cup Winner's Cup 76 and 78, Uefa Cup 83 and Super Cup 76 and 78) being finalists on two more occasions, one in the Cup Winner's Cup of 77 and another in the Uefa Cup of 1984. During this period they could only play once in the European Cup (1982) reaching the semifinals where they were eliminated against the future champion (Aston Villa). Outside of this period, it should be noted that in 1986 they also reached the semifinals of the European Cup to lose again to future champions, Steaua Bucharest.
I can think of another team that in the absence of the Heysel Tragedy and the subsequent sanction to English football could have had its most glorious time in the second half of the 80s, I mean Everton. This team won the Premiers of 1985 and 1987 being runner-up in 1986. In the FA Cup they were champion in 1984 and runner-up in 1985 and 1986. Well, in that period he could only play the 1985 Cup Winner Cup in Europe, where he was champion by defeating Rapid Vienna 3-1 in the final (they had already eliminated Bayern Munich in the semifinals). In 1986 they had been able to fight to win the European Cup but due to the sanction against English football they could not play it and without a doubt they would be one of the top favorites since English football was the great dominator of European club competitions having won 7 of the last 9 European Cups and having representation in the final in 8 of those editions. In addition, during the first half of the 80s the English teams won 2 Uefa Cups (Ipswich and Tottenham) and the 1985 Cup Winners Cup of Everton itself. It is likely that that sanction deprived Everton of being European Cup Champion
100% agree re Everton, the 85/86 season especially, they had Lineker up front who was footballer of the year and were very strong, they pretty much blew the league in 85/86 (1-0 loss away to Oxford late on) and Liverpool went on an excellent run late in the season. In the EC Barcelona were not that strong, or were Steua Bucharest and Everton had European experience and would have been hard to stop and Everton players have said this. Two great documentaries that show this well are "Howard's Way", about Howard Kendall's (the manager) tenure during the successful period and also "Two Tribes" that follows Everton and also Liverpool during the late 70s and 80s where the teams where at the top but the City was suffering a very tough time re high unemployment, social unrest etc... Good shout on the others too.
Would opt for the 70's Borussia Moenchengladbach side. 5 Bundesliga titles won in the era of Beckenbauer & Mueller's all conquering Bayern Munich side. Also went to 5 European finals between 1973 -1980 (winning 2 uefa cup's). From a neutral's perspective it was a team that was very easy on the eye
I'd feel like Juventus, Dynamo Kiev and the two Merseyside clubs might have been theoretically a top 4 teams at that time. Juventus did miss a few clear chances vs Barcelona, and had beaten Liverpool (arguably a Liverpool that was both lesser than what had gone before and the team that did end well in 85/86, including in the Merseyside FA Cup Final?) in the Super Cup during 84/85 (leaving aside the European Cup and what happened there, although that too) and did win Serie A. Kiev won the 1985 Soviet League but qualification was based on 1984 due to the calendar year format in the USSR so they went into the CWC instead and won that in style. Not to take away from the actual finalists of the European Cup too much of course. Even with Champions League style qualification the 4 I name couldn't have ended up as the semi-finalists that year I suppose, unless cup winners got a spot. I think I'd suggest Juventus as the best team, but they were the ones out of the 4 that did get to play in the EC and they didn't win it.
Trying for a combined first XI and second XI from those 4 clubs at that time (not that playing rosters determine everything, and some things can be questionable like omitting Hansen but based on not ideally complimenting Scirea and on I'm thinking beginning to have declined by then I've gone with that - obviously there aren't average ratings to refer to that we can see for him at that time or anything like that; Dalglish on his best days might still be suggested as a choice too I guess even, while going with a 4-4-2 rather than 4-3-3 would bring Everton's Steven and Sheedy into the equation perhaps and their midfield team-mates Bracewell and Reid could be deemed unlucky too and I remember reading (recently) opinions about them having had the better of things vs Matthaus and Lerby in that Bayern Munich tie in 84/85).... 1st XI: Southall (Everton); Bezsonov (Kiev), Lawrenson (Liverpool) Scirea (Juventus) Cabrini (Juventus); Platini (Juventus) Bonini (Juventus) Zavarov (Kiev); Belanov (Kiev) Lineker (Everton) Laudrup (Juventus) 2nd XI: Tacconi (Juventus); Stevens (Everton), Kuznetsov (Kiev) Ratcliffe (Everton) Demienenko or Rats (Kiev); Molby (Liverpool), Yakovenko (Kiev), Whelan (Liverpool); Johnstone or Walsh (Liverpool), Rush (Liverpool) Blokhin (Kiev)
Barca was very unlucky not to win during 50s and 60s. Juventus of the 70s is another team that comes to my mind.
Very much agree with your selection of clubs, additionally regarding Juventus noteworthy that Juve had a minimum of 8 starting players for Italy in the 1978 World Cup, where Italy was arguably the best-performing team (Zoff, Gentile, Scirea, Cabrini, Tardelli, Benetti, Causio, Bettega.) It was almost Juve playing at that World Cup.
I feel Juventus have a so near so far relationship with Europe's premier competition stretching back to the 30s. Despite the famous Juventus team of the 1930s they were unable to win the Mitropa Cup, despite Bologna winning it twice in this era. The Juve of Sivori and Charles of the late 50s/ early 60s did not reach a final, the 70s team was mentioned above were not sucessful, even the 90s team that was so dominant in Europe only managed one CL and lost two finals and despite absolute national domination, two more final losses in the 2010s. Losing their last five finals is now at Benfica CL levels....