Another possibility is that they turned the Phalanx system off because they didn't want it shooting up the Israeli gun/missile boats that it was escorting. The Phalanx system is pretty indiscriminate about what it'll hose down with shells - an incoming missile looks just like a speeding car, a speeding suicide/gunboat or an outgoing missile to it, and it will happily shoot up all of the above unless someone turns it off.
With the man-in-the-loop version, it can (apparently) get very annoying to keep having to tell the Phalanx, "No, do not shoot at the Admiral's car. No, do not shoot at our fellow ship. No, do not shoot down our friendly outbounds." Understandable (if stupid) for someone to just turn the thing off if you "know" there's nothing out there that will need the system. Remember, the Israelis don't have our Aegis systems or our data sharing net to allow the Phalanx to have better cueing and discrimination for targets.
Watched some really sick dudes on a Spruance do a "keep a close eye on that seagull" with a Phalanx once. They microwaved it in mid-air. The really impressive thing is that it tracked the seagull!
The latest mods of Phalanx can be optically guided to take surface contacts. The older models are strictly air defense. They will not even track surface contacts.