I'd argue that single player focused games should be kept seperate from MMO's. As for TERA, I tried to play it again recently, and it looks AWFUL. It has bright colors at first, but once you get past that, the character models actually look terrible. Even the hair, which is not XIV's strong point, looks better than TERA's. BDO and B&S have been praised for their character creation... and not much else. XIV has very good lighting for what its worth, really the only things that could use an upgrade are character and equipment textures and mapping, but the rest looks good.
This game looks nothing like XI. That's laughable.
It also helps to change your graphics settings to output in RGB full instead of limited, as I recently did that and the washed out look vanished.I don't really like "full action" as it got incredibly boring once the novelty wore off in both GW2 and TERA. I feel XIV actually controls better than both of those. I don't really like the way most MMO's have their controls set up compared to XIV, it seems a lot more fluid moving in this game compared to others, and I don't really have any complaints about the battle system other than the extreme reliance on DPS for mechanics. I feel your friends were expecting something different. Tab targeting isn't slow, they probably just didn't like the GCD at 2.5 seconds at early levels and blamed it on tab targeting. I find more people clamoring for turn based RPG's these days, and disliking the move to action oriented.
Move to Real Time Combat
Tab targeting is antiquated. The reason tab targeting existed in the first place was due to technical limitations in the old days. WoW has slowly been moving away from tab targeting with many skills becoming free aiming. Tab targeting, believe it or not, needs to go similar to turn based combat which was also done due to technical limitations (and why everything now is real time). While I do not mind it tab targeting, many of my friends who have tried to get into XIV have described it as "too slow and boring."
The main story isn't that bad honestly. It is a far cry from MMO's of old, where "catching up" was a multi-year process, where in XIV, it might take 2 months to finish both expansions and cap level. I've done a few characters to 3.0, and I'm in the process of doing another out of boredom, and haven't found the process to be that gruelling.
Streamline the MSQ for ARR
As others have state, this takes too long to run through, and has way too much filler content. Revamp it. I tried to get my fiancee into XIV and she straight up told me it was too boring. We're now playing Elder Scrolls Online together instead.
NOTE
I mentioned BDO, BnS, and TERA a lot. The reason why I am not playing any of those games is because Square-Enix is a FAR MORE reputable company that have built a reputation from accepting their mistake (FFXIV 1.0), and literally pulling off a miracle with ARR. As a software developer and long time gamer, they've gained immense respect from me by doing this as I've been involved in projects that have sank due to disregarding customer feedback, and seen games do the same (Hellgate London anyone?) So please do not take the above as bashing...I'm simply stating obvious trends. And while I don't mind XIV's tab targeting....the fact that I can't get anyone to play with me is a pretty good indicator as to what's wrong.