Ragnarok Online was great game when it came out due to the variety of classes and job changes available, along with the plethora of monsters, items, and unique features like Cards, War of Emperium, MVP Bosses, so on and so forth. New Content was plentiful and new maps, monsters, and features were always coming. The problem however was that Gravity failed to think about balancing the game or thinking ahead in regards to what to do next. Worse, they were basically adding features like Transcendent Class that forced you to continue grinding your character which eventually got boring really fast.
It's really hard to say when Ragnarok was ruined because opinions may differ. Some people may go so far back as to say when 2-2 Jobs got implemented, the game was on its way to ruin. For me personally though, the game was more or less discouraging to play for me when Transcendent Classes came out and you had Assassin Crosses coming in with Soul Breaker and other insanely powerful attacks appearing. Of course, Ragnarok still remained quite popular and even if I disliked how the game had headed, I was still drawn to keep coming back to it even with those Transcendent Classes coming in. Though at the same time, Gravity really never changed the way they operated.
Probably though, the biggest killer to the game would simply come from the most destructive of factors in general - Time. Eventually no matter how well made a game is, it will become obsolete by new games coming out, new genres appearing, or changing tastes in gaming. This is perhaps though not the case for Ragnarok Online as no game has really come out that can truly replace the experience you get from it, however, perhaps the game has simply just grown stale at this point. Additionally, people may just be waiting for the sequel to eventually come out.
As for Private Servers, they simply became ruined as a result of the facts from above. Simple put, there is no problems for those creating the emulators based off the game, but if you emulate failure, then why would people want to play it? You might try to cover it with frosting but once people bite through the frosting to the cake, but no amount of frosting is going to mask the taste of a really badly baked cake.
