This Slate article gives a history of what was going on at Disney at the time, so I won't repeat that here. The biggest problems I saw with this film were 1) the writing (both dialogue and story), and 2) the voice acting. The animation also had problems, and it looked more low-budget than it was, but it could have held together with a good story. The special FX were classic Disney and looked nice.
A hero is only as good as his villain is bad, and vice versa. In this film, both the hero and the villain are rather pathetic. They're both passive characters, not taking much initiative to get things done. The villain relies entirely on a lackey with the mentality of a 3-year-old, while the hero accomplishes everything by accident. He defeats the villain with a weak little kick. He saves his friend's life by asking the authorities (a trio of witches) to do it for him. I think I've seen more story tension in an average episode of SpongeBob SquarePants.
This is a perfect illustration of a bad adaptation, and why bad film-making can harm the reputation of the writers and artists involved. I had no idea that this film was based on a series of fantasy novels by Lloyd Alexander. Frankly, I'd never heard of him, which says something about what happened to his reputation as a novelist. In the 1970s, he was appreciated enough for Disney Studios to option his novel series. I assume that this wretched film discouraged his book sales, and it seems the film also discouraged some young animators at the studio enough so they would leave and look for a future career elsewhere. Don Bluth, John Lasseter, and Tim Burton were among those who left.
I wrote an article about the bad adaptation effect, Down the Tube, published in the Internet Review of Science Fiction (2006).