That is why I was taught to shine my shoes, wear the nicest suit I have with a tie, neatly comb my hair, brush my teeth, clip my fingernails and let all that speak for itself. The idea is you don't want to give off a negative impression. If you have to talk about it or apologize for it in the interview then it becomes a distraction. The interviewer will have a harder time focusing on what you can do to benefit their company. In this case, I can see how this became a distraction.
With that said, is it true that there are some LDS kids who don't interview well (e.g. who don't present themselves in an acceptable way)? I'm sure there are. There were plenty of awkward people at BYU. On the other hand, I have met a lot of LDS people who 'get it' - who know how to go out and present themselves. I really think it is less about being Mormon and more about how you were brought up. My dad was the one who taught me how to influence people in an interview, not my Church and not BYU. Much of my success in that regard I owe to him.
I will say this though. I don't need a $1000 suit to look the part. You just have to have a good eye. Chic for cheep baby.