I'm looking at the dispersion pattern on that picture. It looks like it came from astern, and at a slight deflection such that the superstructure would block the Phalanx guns.
Also, remember that Phalanx has to be pointing in the general direction of the threat to start with, on these ships - they don't have Aegis to cue the Phalanx system's radars, plus they have the "man-in-the-loop" version where a human has to okay the attack.
I lean towards the defensive systems not being engaged as has been reported today. It is extremely possible that the superstructure blocked the egagement envelope of the CIWS, but a slight turn by the captain would have opened that up.
I figure, if the radar was on, and that was all they had going for them to acquire, then they saw it when it came into their radar event horizon about 4-5 miles out, and that they had as many as 20 seconds between detection and impact.