What decent teams? Teams like SMU and Memphis had inflated records because the AAC was one of the few conferences who played 10-11 game schedules AND (this is most important) played non-conference opponents. SMU was a 4-3 AAC team (that isn't a sign of a good team) who added 3 wins to their season total by beating Texas State (barely), North Texas, and Stephen F. Austin (FCS).
Your premise is that IU didn't play anybody good because they only beat 1 team with a winning record. That's bound to happen when you strictly play a conference schedule. Had PSU, Michigan, etc played a 10+ game regular season schedule with OOC opponents they all would have had winning records and it completely changes the narrative of your argument.