Their ineffectiveness came from atop. Although they had highly experienced troops and talented generals, their leadership was incompetent. One good example was the the battle of Liao-Shen, the first major battle in the Chinese civil war. The KMT was winning the battle hands down and the CCP was just about to go into the forest and start their guerrilla warfare again. At that critical point, Jiang, the leader of KMT, decided to call back the commander of the KMT armies in the northeast because of he didn't like/ trust the guy. This commander was trained in the US, instead of Jiang's own Huangpu military academy. Thus, Jiang didn't consider this general, Sun Liren, his own. Although general Sun was perhaps one of the most capable generals in KMT, he was relieved of his duty. The new commander to the Northeast decided to take apart Sun's army because he wanted his own people to man the key posts. Once the highly cohesive and highly lethal "The New first army" was taken apart and moved to various places, its fighting capability was completely destroyed and the CCP defeated them easily. And once Manchuria was in the hands of the CCP, the entire country was like a watershed.
The competence of KMT during WWII was very obvious to see. All you have to do is to simply google battle of Changsha and battle of Wuhan. Look at the casualty list as well as the length of the battles. You will see how effective the KMT was against the Japanese. The Japanese got to central China in the Fall of 1937, but the KMT managed to fight them to a stalemate and hold the Japanese in the area for the next 7 years and inflicted close to 200,000 casualties to the Japanese.