The reason they chose the name Gleemax was because it wasn't supposed to be just for D&D, but for M:tG and all other WotC products as well.
I doubt will ever know the full story of what happened behind the scenes. However, in addition to lack of focus and being overly ambitious, I suspect they made two critical mistakes.
First, they hired a company that had no actual development experience as a company - as Shemeska else mentioned, this was Radiant Machine's first project. I'm sure they made the lowest bid, and that's why they were chosen. From a business standpoint, that was not a good move.