[hoosierpearl]

Why did they build New Orleans there?

The answer to the whole question is in your post. The French did it, the incompetent French. You would expect one of their projects to turn out like this.

[ohioWfan]

The answer is that it was above sea level when the French built the city. It has lowered as the ground has eroded underneath it.

(The French are still incompetant, however. ;)