He wasn't, not really. Zidane is basically an improved version of him and even when he was winning 3 consecutive CL titles no one really put him on Pep's level — for a good reason. Ancelotti is a fantastic manager whose best quality is getting the best out of his best players — and when his team allows it, he can win any game. And when we talk about his CL record, we're talking about someone who's had a backline of Maldini, Nesta, Stam & Cafu, with Pirlo, Sheva, Kaka and Seedorf in front of them. Or the ridiculously stacked Madrid side that won Decima where he had maximised Cristiano's output by adjusting Di Maria's role.
It's not a shame to be below Ferguson or Guardiola in the all-time list to be fair. And he's still comfortably in the second tier. But his own level haven't changed that much over the years — he does what he does best and at Madrid that had the likes of Benzema, Modrić and the emerging Vinicius (on whom he had been a great influence by the way), he elevates them to title-winning heights, while at Everton he struggled to make a significant impact because the squad isn't already good enough on its own.