So the one hand it's inconceivable that Western powers can't tell an iridium signal from anywhere on earth. But on the other hand you admit Malaysia couldn't track widebody airliner flying across the country.
While I wouldn't equivocate the professionalism of american and Malaysian militaries, I think it shouldn't be surprising that neither is well equipped to succesfully deal with random, unpredictable scenarios that they've never encountered before.
It doesn't seem that unreasonable to me, If the transponder is off (somehow) air traffic control can't see the airplane. Military radar can, but until an emergency is declared or until the plane does something really weird any military is unlikely to do anything (re: Pearl Harbor, 9/11, Mathias Rust, &c). By the time they figured out the plane was missing the plane was long gone.
Having said that, this whole thing stinks.
A 100-ton airplane doesn't crash, even in the ocean, without leaving a lot of debris. A lot of stuff in a plane floats and by now some of that debris would have washed up somewhere. No debris has washed up.
A lot of the information about the aircraft's course and altitude changes after it ceased most communications turned out to be incorrect. Whether someone is lying or just clueless is unclear.
How and why the satellite data unit was shut down and later restarted is also unclear. Given that the unanimous consensus is that you cannot even do that from the cockpit (you have to get into the electronics bay, accessed by a hatch from the galley in front of business class) either there was a major malfunction or something really bizarre happened.
I haven't yet heard a good theory that explains what happened, but the least bad theory is that the plane was somehow diverted and probably ended up near the Baikonur Cosmodrome. Why and exactly how that happened is at best poorly explained, but the lack of debris indicates that the plane did not crash.