He was wrong about the middle classes economic condition worsening and their joining with the proletariat. The middle classes have grown and become more prosperous.
He was wrong about revolution being the best way to achieve progress. We have come much further by following an evolutionary path, chipping away at the powers of the ruling classes.
He was wrong about a world revolution being successful within 50 years of his writings and crucially his predictions of the industrial classes leading the revolutions were also wrong.
Then there are Marx's 'ten commandments' in the Communist Manifesto (the most accessible of his writings I suspect because Engels co-wrote it). These 10 pronouncements (the only real idea Marx gave of what he meant by communism) have just failed to deliver.
Basically he wanted everything under central control and owned by the state. After the Soviet Union debacle, what is now not in dispute is that some things just work better in the private sector, that is not to say everything does but most things do. I think regulation is a better way to protect workers than ownership in most cases.
Of course Marx would have been horrified by the brutality and lack of democracy that occurred in the Soviet Union and other 'communist' (state capitalist?) countries, but he has to take some of the blame for this in my opinion by making his writings so inpenetrable (maybe that is why Marxism became so popular and destructive in a theological sort of way). He needed to detail in a much more simple way exactly what he meant by communism (assuming he knew, which I doubt) and he needed to emphasise much more about the need for an open democracy for it to work.
I am sure people like Chris Dillow and Norman Geras have read all of Capital (and understood it). I could never manage more than a skip read - it is overly complex in my opinion. I could only manage to understand (or think I did) his smaller works like 'On the Jewish Question', the Manifesto and also some of his critique of capitalism in his main works.
Marx was much more successful in his critique of the capitalist system (typical of us whinging lefties) than his description of communism - this is his enduring legacy, along with Hegal's idea of the inevitable progress of knowledge through the natural selection of the most accurate theses (the dialectic).
Marx was potentially a genius because he was the first to get close to understanding the economics behind the confrontation between the ruling classes and the masses. He stated that the capitalist drive for efficiency led to more machinery and technology (fixed capital) and less labour (variable capital) in the production process. Because (according to Marx) profit only came from exploiting labour - his prophecy was that profits would inevitably fall, the number of capitalists would shrink and the worsening conditions of the workers would lead to revolution (I think the profits of companies like Google and Microsoft show a flaw in this thinking).
However the jury could still be out on Marx's prophecy because as the developed world has become more middle class, the capitalists have moved their capital to exploiting the workers in the developing world. As long as the supply of workers continues to increase (population growth), capitalism can easily continue it's exploitation. But the increasing ecological collapse of the planet places limits on population and economic growth. This is something Marx didn't foresee but could mean he is in the right ballpark in his prediction as developing world workers get more organised. I think that technology has provided such potential great wealth for us all (if we share it equally) that Marx will be proved wrong, but we will see.
Anyway getting back to the point I wanted to make about Chris Dillow's article - Chris argues that the market didn't create inequality it just continued what was already there. I disagree. Even from a perfect starting point of absolute equality (which is impossible), there are meritocratic differences between people - even slight differences can be exacerbated by the market (look at the difference in wages between people - can one person really deserve 1000s of times the income of someone who works longer hours and has not enough to eat) - we will always need to regulate the market to keep it fair and we will always need welfare to protect those misfortunate enough or vulnerable enough to be exploited. Marx believed revolution was the only way to achieve this - I believe social democracy is a better way.