I knew only one guy who really knew how to fight with martial arts, he used to bring me all the brown and black belts that he would run into and have them spar with me (I don't do martial arts) over and over what I heard from them after their systems fell apart within about 10 to 30 seconds were things like, "well, you aren't doing it right" or, in class we..., it seemed to me that they were taught to do Karate dancing, and to fight at arm and leg distance. Closing on them and taking them out instantly worked every time (except with my friend, he could truly fight under any conditions and he concentrated on dealing only fatal or disabling blows, he never 'danced' and paraded).
Exactly right. Street confrontations don't have referees and are not dojo dance contests ie: expect the unexpected. Very few schools or instructors teach combat from the clinch distance consequently their students are confounded by unorthodox attacks. Mindset is everything and your best weapon is between your ears. High stress situations inhibit fine motor movements. Simple direct gross motor movements work best and that's probably why your friend was so much more effective than the dojo dancers. Google Kelly McCann or Lee Morrison for more info on the psychological aspect of fighting/combat. I don't think martial arts are bad. They teach discipline,physical fitness and give confidence to those need it but a lot of students get artificial views in a structured environment and sometimes rude awakenings. Watch the early UFC matches for examples.