The answer is that Iowa doesn't have skiing, fencing, rifle (wtf?), men's ice hockey, women's ice hockey, or women's bowling (wtf again?). That's 6 of the 15 sports that make up the standings. We gain points over most schools on wrestling, but lose a bunch in other places we have no control over.
I've always thought the Director's Cup is a joke. The top 20 or so are always (A) universities with massive enrollment (and thus larger AD budgets) and often statewide monopolies or, (B) a more average school that happened to have a very good year in select nonrevenue sports (ISU is in the same boat as us, but finished 25 spots higher because they had some success in women's gymnastics and women's track and field---that is the entire difference, for the most part, between the 25 spots). Many schools are automatically shut out of some points every year because they don't have one or more of the sports included in the formula (so the really large athletic departments gain points, even if their team in that sport is barely good enough to finish in the top half in a sport with very few teams).
I would love to brag about the Big Ten having 4 of the top 10, but look at who they are: OSU (no other BCS programs in a large population state), Wisconsin (no other BCS programs in a decent-sized state), Minnesota (see Wisconsin), and PSU (they've just got Pitt in a very large state). Two of those three benefit greatly from pretty much automatic points in women's and men's ice hockey.