First of all, a theory can only work if the people following it are on the same page.
Christianity for example. The vast majority of people who are Christian believe that Jesus is their savior and that the strength of their personal relationship with Christ will determine their destiny in the afterlife.
Those whose beliefs are different, like the crusaders and the inquisitors, do not share the same beliefs and used the name of Christianity to perform political acts in the name of religion. For example, after the dark ages, there was an abnormally large number of soldiers in europe due to the fighting among clans and slowly developing nation states. These soldiers, in a similar way to the ones today, found it hard to adjust to normal society. For this reason, the Church sought a way to reconcile this reality. To solve this problem, as a political power that it was, the Church declared a holy war against the Muslims and sent Europe's soldiers to the holy land. In a similar way, the time of the Inquisition was a period of discovery and enlightenment. The scientists of the day were discovering new things that debunked a lot of what the Church had told it's people. These new (and provable) ideas made sense to the people, but frightened the Church. The Church, being the political power of the day, was afraid that if people began to question and redefine their beliefs on scientific issues that they would do the same thing with their religious beliefs as well. The Church sought to stop this by punishing anyone who questioned any of the beliefs the Church had a stance on.
Communism, however, worked completely differently. Nearly everyone in the Church had the same (or similar views). Most people who lived under communist rule had no idea what communism was or what it was supposed to be. Only those who organised the revolutions had any idea of what was going on and what was going to happen.
I think, to answer the second half of your question, that the errors of the Church have been overlooked for the same reason that the faults of US presidents have been overlooked. Most of the Church's history has been 'good'. However, people choose not to concentrate on the rough edges of the Church's history lest it give a false impression of the Church.
Every group in history has had it's good and bad moments, it's good and bad leaders. One must understand that to understand why Christianity hasn't been 'tarnished'. It hasn't been tarnished because it's history is no dirtier than any other organisation. I mean, many people argue that the Jews killed Christ. Others argue that the Muslims provocated the Crusades. Terrorists provoked the War on Terror, and so on. Humanity has always tried to find someone to blame for their problems. It's so much easier that way than to accept fault ourselves. It's not right, but it's a very human thing to do.