The way I remember it NLMs were pretty stable. Anything on Windows was not stable, userspace or otherwise. Netware's TUI was just as good as NT's GUI for what it needed to do. It wasn't a liability. Netware's superior directory service was more important.
Netware's demise was the transition from IPX to TCIP/IP and the explosion of the WWW. And from my perspective it wasn't really NT that knocked Netware down. It was Linux and Solaris. Novell kinda saw that coming and tried to figure out a future with SuSE. They just never got the combination of their directory server with Linux right in time. Microsoft stumbled around for some years, but they got their directory services figured out before Novell got their OS story straight in the new world.