Saudis kill thousands of Americans and pay off the Palestinians to kill us but you regarded Iraq as a bigger threat because they had some tanks?
Not a bigger threat but a higher priority. It is basic military strategy: Depose Saddam first so that we can establish a strong military presence in Iraq. From there we can more effectively combat terrorism in Iran, Syria and Saudi Arabia (which we will do in due time).
It is simple geography. It is not rocket science.
Furthermore, as much as I would have loved for Bush to nuke every major city in Saudi Arabia following 9/11 it simply was not going to happen.