Reagan thought having a ticket from adjoining states wasn’t a good idea (back then, it was believed having candidates from different areas of the country would bolster the ticket — which really has been proven to be nonsense. Clinton broke that in 1992 when he chose adjacent stater Gore). Since GHW Bush was the “runner up” and establishment preference, he chose him, which was a big mistake.
Reagan similarly goofed in 1976 when he picked liberal Pennsylvania Senator Dick Schweiker as his running mate (which may have ended up costing him the nomination that year). Unfortunately, his goodwill towards ideological opponents within the party proved disastrous for the long run.
I read also that there was a stigma issue of Laxalt representing Nevada, that the casino and backroom image of the state made too many people nervous and scared off a possible Laxalt pick.