It's the novels. That's what it is - the novels. The novels seem to color peoples' views of the Realms, and really, that's not surprising.
It's unfortunate that the most accessible FR products are also what gives the setting it's black eye. In most cases, the novels are laughably bad, and this certainly will cause people to run away from the campaign setting.
You said it, jester47 - the campaign setting and novels are two entirely different things. They are both produced to make money (of course), but how they go about it isdifferent - and this difference is not necessarily goal congruent. The novels are there for telling a story and getting quick enjoyment, and to appeal to the mass market. The campaign requires a bit more investment in time, and thus background details are more prevalent. (The novels are easy to grab and read, while the campaign setting is obviously monstrous in size and scope - those new to the setting are more likely than not going to try the novels first, or are more likely to have had experience with the novels before the campaign setting itself.) Result? More people have read the Elminster novels than have read the FRCS.
Virtually every complaint I've seen has been based on the situations put forth in the novels - and rightfully so. Sure, there are a few gems in the stack, but not many.
I don't think anyone who is anti-FR at this stage is going to be "unconvinced" that the setting generally stinks. I generally ignore the comments, or if I'm feeling particularly smarmy, chime in with a quick *cough*ignorant*cough* comment.
As for myself, I've played in the FR since the Old Grey Box, and have learned (the hard way) to quit reading and ignore all the novels. My campaign and players are better for it.