Lloyd said Houli should have been given more opportunities in the seniors after being "a dominant VFL player".
Houli, whose management says wants to be traded to Richmond, managed just 26 senior games in four years - 22 of which were under Knights in three seasons.
Lloyd said Houli could play 100 AFL games despite deficiencies that included difficulty hitting short targets and consistency in contested ball situations.
"I felt like there were stages in the past three years where he deserved to get five, six or seven games on the trot," Lloyd told afl.com.au's Trade Week Radio.
"He never really had the confidence in himself and felt like he was a bit of a whipping boy at times.
"The [Bombers] beat North, they'd lost six or seven in a row, Bachar gets a chance, has a great game and he's back out of the team within two weeks."
The Bombers were buoyed by the re-signing of Brent Stanton, Alwyn Davey, Leroy Jetta and David Myers this week, who all recommitted after Hird was confirmed as coach.
Despite Hird's attempts to convince Houli of his future at the club, the 22-year-old wants to leave.
"It's disappointing when you put three years into a player and then they walk out," Lloyd said.
"I can understand if Matthew was still at the helm because [Houli] obviously didn't get the opportunities he should have got under him.
"It's sort of what might have been with Bachar. There's a lot of players in a team that have strengths and weaknesses but you find a niche or a role for them, and I think that's what Hirdy thought could happen for Bachar at Essendon.
"Bachar felt the opportunity was best to leave so I don't begrudge him that."
Lloyd said 2011 would be a make or break year for his former teammate, who was sure to impress his next club with his commitment.
"It's just whether he can fit into a team's framework with the deficiencies he has got, but I just think with confidence he can become a really good player," he said.
Lloyd said assistant coach Alan Richardson's defection to Carlton would be a huge loss for the Bombers but understood his decision after he missed out on the senior role.
He also said he would like to pursue a part-time role at an AFL club, possibly as soon as next year.
"I'm still weighing all that up at this stage," he said.
"I'll just see what fits in best [with media commitments]. It's a bit all up in the air but it's something down the track.
"If it's not next year, maybe the year after I'd like to be back with a minor role at an AFL club."
