Was the server running Windows? Windows doesn't perform really well in 1G of RAM, especially if you're running GUI Windows and not Windows Server Core. Then running SQL server on top of that, well that 1G RAM probably IS the performance issue. A good rule of thumb is Window takes 3G, and your programs go on top of that.
There were clearly other issues from what the OP described though, and to use LINQ you do have to have a good clear mental model of the runtime actions that it give you. It's a power tool, and can let someone experienced develop very fast, or let someone inexperienced cut their fingers off equally fast!
To provide an answer to OP, about following MS recommendations .. the reality is that not all MS advice is good advice, and also that with so many versions not all of their documentation is up to date. However it seems your team did draw the short straw! Mostly their documentation is very good for product and API level documentation, not as good for architectural documentation.
Also, just sounds like you hate Microsoft, and are looking for (poor) excuses to continue your hatred.