The trouble is that we have been involved in a 7 year fight for a Champions League place against rivals (the rags, the dippers, the arse, and the chavs) far more easily able to take the hit of missing out for a year or two, courtesy partly of their higher global profile ('istreeeeee if you like) and their sustained ability to attract top players without it (the Chimps League), and with the sword of FFP dangling over our heads and the media baying for someone to cut thread. We're reaching a point whereby we will be more readily able to take risks on players in the future, but for the moment our reticence has been understandable IMO.
As regards the players you mention, despite some high profile errors perhaps born out of a lack of physique and a compensatory rashness associated thereto, Otamendi was and still is a class and a half above Denayer. In fact in terms of what Pep wants (comfort in possession, the ability to receive the ball under pressure, and carry it up over the half way line), I'd argue that Otamendi is one of the best in the business. Denayer was never good enough for the level we're at, albeit that I accept that's just my personal opinion.
As to Sancho, I can only re-iterate that he has just turned 17, and was clearly being groomed by the club for a prominent future role, so it's broadly irrelevant who we are currently trying to sign. By the time Sancho might have been properly ready (a la Sane perhaps), Sanchez would be pushing 31. What are we meant to do whilst we wait for him to fully develop mentally and physically? Not sign anyone? Arsenal signing Lacazette and sniffing after Lemar (and Mbappe come to that) doesn't seem to be putting the lad off wanting to sign on at the Emirates - if the rumours are to be believed - does it?