The content was embarrassing and revealing for the people it concerned (hence efforts to remove it through any means necessary), but not libelous or defamatory - it consisted of archived material of their own words.
Libelous/defamatory content is not illegal in the same vein as pirated movies or CSAM, in that the Internet Archive would be criminally liable for hosting it. I wouldn’t imagine it’s illegal for IA to host a snapshot of a defamatory news article, for example.
> The content was clearly libelous and defamatory, which is pretty illegal.
That is incorrect. In the US, the _act_ of libel is illegal and the author of it can get into legal trouble. And a publisher might if they knowingly published false information, which is harder to prove. But the libelous _content_ itself is not illegal and is in fact protected by the First Amendment.