Distributing .NET apps w/o a CLR is probably the biggest strength of Mono - it's how Mono is able to work on iPhone, Wii and other devices which do not allow dynamic code generation.
I would say that Xenocode's failure wasn't so much that no one found .NET w/o a CLR useful, it was that they likely only supported Windows.
Oh well, Xenocode's loss is our gain :-)
There was once an entire company called Xenocode, founded by ex-MS devs, and built on the idea that it would be really useful to distribute .NET apps without the CLR. They had a tool which could do this, even with ngen'd assemblies. Turned out it wasn't so useful. They've now pivoted into enterprise application virtualisation, and their offering is similar to Softricity, which later became Microsoft App-V.