First I was not a soccer fan before the wc98 so I dont know the whole facts but why would a coach just before the world cup cut his captian from the squad and then come up with a 3-6-1 formation which didn't even suit his team.
That coach, Steve Sampson, was in a no-win situation. He had a team that stumbled through qualifiers. The team was composed of mostly players who had been with the national team program for a almost the entire decade and MLS wasn't quite old enough to be relied on as a talent pool. After the qualifiers, Sampson probably looked at the team and decided the team wasn't good enough to survive the group stage - a correct assessment, imho. What he did was bring in a few new players but still keep the core of the squad. He also didn't have a goal poacher (Eric Wynalda was coming off serious knee injury) but had decent midfielders, ergo 3-6-1. As for the Captain For Life fiasco, it was a symptom of a bigger problem, the veterans thinking they were bigger than the team. Sampson wanted Harkes to play a different role and Harkes reportedly refused. And also reportedly, he had been a divisive influence on the team before. My guess is that the decision hadn't been made on a whim, though it probably could have been handled better. So he made some serious mistakes, but I don't think he had much choice. He could have gone with the same team and tactics he had used during qualifiers and had a bad World Cup. Or he could change things up and hope that it would change things for the better. He decided to take the gamble and lost big. Although Sampson gets criticized for the '98 debacle - and deservedly so - but it's easy to forget that without him, the team most likely would not have qualified for the finals in the first place.