It was more than just a bad move.
Benitez threw his eggs in one basket, in hope that Alonso would be of. He wanted Barry so he could play, center mid, defensive mid, left back and left mid. That is the only reason he wanted him, versatility.
For me it was one of his biggest, if not biggest, failures at the club. He chose a player, over one he already had. Alonso was and is a far better player than Barry ever will be. But it is no surprise because Benitez had a habit of wanting to play players in different positions. This is why Barry was going to be his next, Dirk Kuyt esk, "love-child"
At the time, it fell through and nobody really cared. But what would happen later on, still effects us today. Alonso felt not wanted (after the fantastic season he had) and rightfully left. Leaving us with HUGE void we still haven't replaced today and I don't think we ever will, unless we bring him back under Kenny.
He was that PERFECT link player between Defense, Midfield and Attack. Gerrard of course, got all the plaudits. But it was Alonso that let him play and do what he wanted going forward. He was that perfect pass into Gerrard and disciplined enough to cover him. Since he has gone, we haven't had that pass or that discipline. Although Lucas IS COMING ALONG!
Benitez didn't just fail in getting Barry, he lost arguably our best player at the time ASWELL.