I think things started to go awry when the SWP (along with much of the left) completly misunderstood the nature of the rise of New Labour.
I remember how most of the support for NuLab seemed to come, in my experienced, from the new breed of urban proffessional yuppies - individualistic, ambitious corporate ladderclimbers who were cheesed off with the "incompetance" of the Tory government, but by no means wanted any sort of notionally leftwing government to take over. All the criticisms of the John Major governemtn were that it was "inefficiant", "incompetant", "a mess" etc. Never that it was "unjust".
What these new yuppy-types wanted was an equally nasty, rightwing governemnt that was "competant" at the job. That's what New Labour offered, that's what they voted for and that's largely what they got.
The left, meanwhile, chose to interperate this ugly phenomenon as a seismic shift to the left in the psyche of the masses. They predicted a "crises of expectations" that never came because most of New Labour's supporters expected pricesely the rightwing policies they got and were pretty much happy with them.
It was this naive interpretation of the election of an overtly rightwing governemnt as some sort of widespread rejection of tory values that started my slow disillusionment with the SWP and the left as a whole. They were, it seemed, wilfully blind to the unpleasant reality of what was unfolding around them. There was and has been no "upturn" in working class militancy or resurgence of leftwing ideas - quite the opposite has happened. The last 10 years has seen the final - and possibly permanent - nails in the coffin of the workers movement and leftwing ideas as a whole in this country. I have never known people to be less receptive to them than they are now.