You should read the full report
http://www.maib.gov.uk/publications/.../2007/ouzo.cfm
-
it's very sobering, with good information on night vision and
ship-to-yacht interactions.

BUT, what I still don't get, is why couldn't the three gents onboard the
Ouzo just avoid the Bilbao altogether?

I mean the question is literal, what would cause them to NOT be able to
avoid her, I'm not blaming the victim here.

Assuming they were on watch and not below, in clear conditions (though
night), would it have been that difficult to see the hugely larger Bilbao
before getting so close? Even if all her running lights were off, there
were thousands of passengers on her (or a lot) so there would have been
at
least the common area lighting on. Why couldn't the Ouzo see her?

Why did Ouzo allow her to get so close in the first place?

As I recall, they were in Southampton water, which is a (relatively)
small area with lots of shipping/cruisers etc. Makes it even more of a
puzzle in that they didn't seem to have a lookout despite their
experience.

"The crew of Ouzo were thought to have been skilled and conscientious in
their approach to navigation and watchkeeping, and, if they were conforming
to their usual practices, they will have set watch routines with two crew
members in the cockpit at all times...A million candela flashlight was kept
ready...to warn ships of their presence...As regular sailors in those waters
and with local knowledge, the crew might even have realised that it was the
Pride of Bilbao, bound for Spain.

"The quality of the lookout on Ouzo as Pride of Bilbao approached will never
be known, however if the crew were alert to her approach it would have
appeared that she was going to pass well clear. In fact, up until 0101, she
was steering a course to pass them at a distance of about 0.5 nautical mile.

"On reaching the waypoint position at 0101, Pride of Bilbao began a slow
turn to starboard. We do not know if the Ouzo's crew noticed this but, if
they had done so, with no other obvious reason for the course alteration,
they might have thought the ferry was altering course to give way to them in
compliance with Rule 19 of the COLREGS. This, in turn, might have led them
to believe that the ferry's bridge team had seen them, thus possibly
relieving them of some anxiety.

"The alteration of course took more than 3 minutes to complete...such a slow
manner can lead to doubt and indecision on board other vessels..."

The officer "saw a cluster of bright white lights before moving to the
steering controls and losing sight of the yacht. It is possible that these
lights resulted from the use of the flashlight, which the yacht's crew kept
at hand for such emergencies"