I love Norfair when it's legal. Haven't lost on it in tournament or MM, besides random characters and teams (my partner SD'd with a full fresh stock)
It's a terrible stage competitively because of the layout. Simple as that. The layout of this stage enhances running away to a level that's not completely unbeatable, but is simply anti competitive. Because of that, banned.
For Nado: what you don't realize is that to punish nado, a lot of characters need plenty of ground space to do it because they cover ground quickly that way. However on a stage like norfair, characters that tend to punish it well now struggle. Like Diddy, how is he gonna punish Tornado if you sweep around to the other side? He can run and jump/fall in the air, but that slows him down and makes it harder for him to catch MK EVEN if he throws a banana and it lands.
Lots of room, and lots of breakage in the ground, leads to characters HAVING to be airborne to traverse and punish Nado. Which, a lot of characters cannot strongly punish MK for doing it if they have to go airborne.