The winter weather doesn't help recruiting much and smart kids from Michigan often want to go to the best private schools (Stanford, Harvard, Georgetown...). Out of State tuition in Michigan is very high so if you have a partial scholarship and you're from out of state, it will still be expensive to run in the snow and ice
Michigan State has/ had a bigger roster and does a much better job recruiting the "in state" diamonds in the rough from the rural schools. MSU has developed a culture of tough rural Michigan runners where Michigan hasn't found a reliable recruiting niche
UM is between a rock and a hard place as they don't compete well "in state" and they can't bank their academic excellence to attract the best "out of state" talent. I'm not sure how the expanded Big Ten will affect things in the future. The smaller roster sizes that are coming will probably help the good but not great schools