I am not sure I am agreeing with you or not.
I mean, there are a lot of bands where I think, "They should be more popular," but if I sit and think about it, it is kind of obvious why they are not. Take one of my favorites, Neal Morse. In a prefect world, he would be huge, but his style was already too much for the masses and was only even going to appeal to a niche audience, and that was
before he went the overtly spiritual route.
In the case of XTC, I think they had enough catchy pop songs to where they should have been bigger, but a variety of factors worked against them, some self-inflicted, although while it seems unfair to say that Andy Partridge being unable to tour because he got stage fright due to going off Valium was self-inflicted, he does admit now that a big part of it was that he was sick of touring and he just didn't want to do it anymore (they were getting robbed blind by their management and the record company, and he was tired of the relentless touring and making nothing).