the MAS fought like crazy, human torpedos and sabotage and stuff. Yes their equipment sucked, but not that badly by the standards of 1937-1938.
The most consistent problem is that Moosalini was playing hitler to his own advantage. He asked for what was essentially 2-3 years of coal, oil, metals, rail assets, new fighters etc. just as a bribe to enter the war at critical times. He constantly pursued Italian politically-focused objectives rather than aiding the Nazi’s as a adjunct or auxillary force. As AXA depicts, the Germans had very little in the Mediterranean at the beginning of the war and very little way of getting any down there.
However, this was a massive oversight, because there were about 5+ specific times where Germany was forced to suddenly forced to divert massive air fleets and invasion forces in order to shore up gaps in its southern front (siege of Malta, Crete, Battle for Greece, Rommel begins, Rommel needs help to win, Rommel needs help to survive and evac).
Since Germany isn’t a real life naval power, and it was right in the midst of the Barbarossa/Blitz campaigns, these piecemeal interventions were a running disaster. Hitler had some interesting military insights and skills (contrasted with his generally suicidal approach to Total War) but he does not appear to have had any grand plan to control the Mediterranean or work closely with his Italian allies to help them gain and hold strategic objectives. The failure to take Malta or mount a successful UBoat campaign in the med made general victory impossible and it denied Rommel any chance of a successful stratagem.