In excerpts from his new book, Mad Dog: An Englishman, published in the Mail on Sunday, Moody said it was impossible to say how much impact the "off-field stories" had on the team's performances, but "they clearly didn't help".
After arriving in Queenstown in September, Moody said an afternoon of activities in the "extreme sports capital of the world" soon "descended in another fashion altogether".
"I had been growingly concerned about the attitude in the camp, which had become apparent pretty much from the moment we arrived in Auckland.
"We were on the other side of the world, a lot of the guys were young, well-known, wealthy and believed they were invincible. I remember thinking that some were not quite in the right mind-set."
Members of the side went out in Queenstown, ending up at Altitude Bar in Shotover St during "something called a Mad Midget Weekend".
While Moody headed back to the team hotel early "acutely aware that, as England captain, I needed to be very careful in everything I did", some of his team-mates stayed out.
Moody had no issue with his team-mates' antics as long as they "didn't lead to trouble".
However, they did. That evening marked the start of "Tindallgate", after Mike Tindall was captured on CCTV cavorting with a "mystery blonde".
The woman was later revealed as an ex-girlfriend with whom he had remained friends, but the situation had already escalated into something of a public relations nightmare.
The footage appeared on YouTube and Queenstown bouncer Jonathan Dixon (40) was charged with accessing a computer system and dishonestly obtaining video surveillance footage.
Tindallgate began soon after James Haskell, Chris Ashton and Dylan Hartley upset a hotel employee in Dunedin by making inappropriate comments when she went to their room to retrieve a walkie-talkie.
The news was not made public until a fortnight later, but it caused "unwanted worry for the `Dunedin Three"'.
"What happened was indefensible," Moody said. "I am convinced the lads did not mean to be rude, intimidating or offensive but they got it very wrong."
As captain, Moody took "some of the blame" as the "buck stopped with Johnno [coach Martin Johnson] and me".
A players' meeting was called, with the side resolving to "be squeaky clean" from then on.
That lasted almost a fortnight until "local media" accused the team of cheating after converting some of its tries against Romania at Forsyth Barr Stadium using a different ball to the one used in the game.
England kicking coach Dave Alred and conditioning coach Paul Stridgeon were subsequently banned from the stadium for England's game against Scotland, which England won 16-12.
Moody said England's 2011 Rugby World Cup campaign was "a disaster".
"For many, it will be remembered for the off-field incidents. I maintain that they were blown up and taken out of context but, at the same time, I concede that some of the behaviour was, at best, naive and, at worst, totally unacceptable."