I don't see why Marcos hasn't had more success against Nadal. He has an excellent Nalbandian-ish backhand, forehand is smooth, solid serve and great feel/hands. I know much of his issue is mental, but still, he doesn't really have anything Nadal can truly attack.
It's because he's not consistent enough on serve or with his FH when he gets the chance to attack. If he's hitting it well, he causes problems for anyone, but he'll invariably make a string of errors and get behind in the set. If he serves anything better than 50% in a match then it's a bonus, and serving at 50% is almost never enough to defeat Nadal. On top of all this, Nadal does a good job of moving Baghdatis around and tiring him out since Baggy will back away from an aggressive FH chance since he's missed some already. When Marcos is hitting it well and getting some serves in, he causes problems for Nadal, but there will inevitably come a time when he'll miss a bunch of serves and/or miss a bunch of FH's/BH's.