The crux of it is that she just lost the faith of senior staff. The cause of that probably can't be known by outsiders. But the issue blew up in the wider community when the grant was posted.
Actually, it is known by outsiders. In the end the staff were very open about their concerns. It was the secrecy, dissembling and frankly bastardry that caused good people like James Heilman to be removed from the BoT over the fiasco that was the Knowledge Engine.
I don't think the community necessarily rejects the idea of a "search engine" project, but the way it was communicated (or lack of) is the main problem.
As well, the foundation has no current strategic plan at the moment. Once there is a plan (formed with community involvement) and it's decided some search project should be a priority, then I think most people would have no problem with such grant funding.