You should see the problem with what you're saying via the players you've mentioned. They were plying their trade 16 years ago where a specialised destroyer who couldn't really play, but could palm the ball off to those that could, was perfectly normal and incorporated into the infrastructure of both the midfield as a unit, but also the team as a whole. Such players and such ways of setting up teams are so niche as to hardly exist now. You certainly don't bring players in knowing they can't play football anymore as you're just delimiting yourself straight out of the gate, which is why so many have a particular annoyance at the notion of bringing in such a player whilst the team we got him from actively sought the polar opposite.
Whatever you think about the viability of getting Joao Neves instead (we didn't stand a chance against PSG's financial package) of Ugarte, it's the principle and what both stand for that has gotten under the skin of those opposed to what Ugarte represents. One player is the embodiment of control, composure, progression, skill, perpetual movement and constructive play, the other is the antithesis of this. One player just needs competent teammates around him who can also play football, and you immediately introduce complex interplay and problem solving on the offensive end as well as perpetual probing because using the ball is an intrinsic principle for them. The other requires teammates to play football for them because they struggle badly with that aspect of the game. The Joao Neves types are what nearly all of this clubs' success is founded upon and our greatest midfielders all have far, far, far more in common with that way of playing than they do with Ugarte's. Edwards, Crerand, Robson, Keane, Ince, Carrick (just using those expected to destroy and then progress) are what this club is accustomed to - all of them exceptional, rapid progressors of the ball upfield without pause or hesitation. Ugarte might better be compared to someone like Nobby Stiles, but even then, Stiles was an exceptionally gifted ball-winner and destroyer with a sixth sense for sniffing out and destroying danger that Ugarte does not have, which offset his lesser ability with the ball.
As above, a big problem for Ugarte is that he is not good enough at being a destroyer to forgo football playing principles for. If you did indeed have an elite destroyer or interrupter of opponents out there: a Kante, Makelele, Davids or even a Gattuso, or considerably lower, a Nigel de Jong, you could somewhat understand it in the case of even de Jong, whilst being onboard with a Gattuso (possibly), the first three being infinitely better actual footballers than Ugarte before even factoring in their superior defensive work. So not only is he supbar at what he's supposed to be good at, he is some way below the bar as an actual footballer. It is very problematic because the reasons to facilitate his game aren't really worth it. He is a square where a circle should be, which is why he got bounced out of PSG in favour of a circular peg that slotted in so well that PSG have arguably the best midfield in Europe this season.
The type of player Ugarte is was actively sought after in the 00's and he can be looked at differently through that kind of lens, but you really don't see many teams using this kind of player anymore. If you think of it another way, if Ugarte wasn't here, which of the CL-placed English clubs do you think he'd see first team action for? Or even, who would be in for him? Liverpool? City? Arsenal? Chelsea? even Newcastle would have no use for him. All of those sides have infinitely superior progressors of the ball and none use a player who needs to be catered to because he's a specialist who struggles at the footballing aspects of the game.
Unless he develops considerably as a footballer, he's a really bad buy that we've saddled ourselves with and will have to upgrade upon at the earliest opportunity.