This is one story I've been trying to get to the bottom of for some time. I'm fascinated by the 49ers dynastic run in the 80s and early 90s, which is why I've read a handful of books about them.
In my years of collecting random stories, there seems to be differing accounts as to whether or not Bill Walsh is as much of a genius as he is credited for. I preface this by saying, regardless of the Montana situation, Walsh was an innovator and changed the football landscape. There's a reason he's in the Hall of Fame.
According to David Harris' The Genius, the 'Niners new scouting director at the time was essentially the man who found Montana. He had ranked the Golden Domer "as the best quarterback in the entire draft but non of his scouts agreed."
Sam Wyche was sent to check out Joe as part of the trip to see James Owens. "Joe was staying with his girlfriend down in Manhattan Beach in Southern California and Owens was at UCLA. Walsh wanted to know if Owens could catch the ball, so Sam called Joe and asked him to come over and throw passes to him...When Wyche returned to the Bay Area he told Bill that he'd better take a look at this guy Montana. He just might be the one."
Bill and Sam went to work out Joe again the week before the draft and the results were more of the same. "On their flight back to San Francisco, Walsh told Wyche that his mind was made up. He'd pick Owens in the second round and Montana in the third."
In Glen Dickey's 49ers, it is apparent that Bill really sought Morehead State QB Phil Simms. However, the team traded it's 1979 first round pick in '78 (which ended up being first overall) as part of the package sent to the Bills for O.J. Simpson. This idea would be backed up in Phil Simms' autobiography, Sunday Morning Quarterback. In the book, he mentions how Walsh worked him out and came away impressed with his quick feet. Walsh remembered, "I left feeling Phil was our man, but it would soon become evident that other teams were looking at Phil and he would most likely be drafted before us." Simms ended up being selected seventh overall by the Giants.
In search for another QB target, Walsh worked out Clemson's Steve Fuller, which incidentally allowed for the team to discover and draft Dwight Clark in the 10th round. According to both books, Walsh came away very unimpressed with Steve Fuller after that tryout.
Dickey mentions that Montana was "the last on his list," but he was somewhat interested in him. That workout with Owens appeared to change his mind entirely. Walsh was quoted as saying, "I sensed just watching Joe in that workout that he'd be able to [improvise] in time, though he surprised me by how quickly he learned everything."
It would appear by those accounts that Bill really had targeted Joe the entire time after realizing Simms was not an option.
Legendary Bills' coach Marv Levy was the Head Coach of the Kansas City Chiefs in 1979, and relays a quite different version of that day in his autobiography. "We—and everyone else in the NFL, too—knew that the San Francisco 49ers would be going after a top-notch quarterback in that year's draft...we speculated that they would be going after Clemson's Steve Fuller, the highest rated quarterback still on the board."
The Chiefs weren't on the clock again until the early stages of the second round and started thinking of a Plan B. "If the 49ers did take Steve at the bottom of the first, I had my eyes on another quarterback whose grades in that year's draft really didn't merit his being selected early in the second round, but there was something about that man that told me he was worth the gamble."
"Kay Dalton, the coach on our staff responsible for the passing game, was assigned to work out quarterbacks. When he returned from his trip, his initial reports were about those who were potential first-round selections, but he, too, felt that none of them merited being taken with the second overall pick in the draft [They chose defensive end Mike Bell]. Kay spoke highly of Steve Fuller, but he went on to comment that there was one fellow, a non-first-rounder, Kay said, whom he liked best—better than any of the top two or three!"
After calling Joe's college coach, Marv came away with a gushing endorsement. Levy "would have been quite content to use [his] top of the second choice on [Montana]."
However, Levy also had a very meddlesome team president on his hands. Jack Steadman was not buying into the strategy of "bypassing the best quarterback available." Levy, "realizing now how many times [he] had persisted in having it [his] way," got on the horn and worked out a deal to trade up just ahead of SF and take Fuller.
While Walsh had made it quite clear in the other two accounts that he did not want Fuller, something pretty interesting happens next.
"Just seconds after our selection of Steve Fuller was announced, the telephone in our draft room buzzed. The call was for me, and, on the other end of the line I head the voice of my old friend, Bill Walsh, who was now the head coach of the 49ers."
"Marv, you no-good so and so!" he shouted. "We were going to pick Steve Fuller, and you guys knew it, didn't you? He said it with no rancor in his voice, because he knew the chess games that were always played out on draft day. In fact, Bill was a master of such shenanigans himself."
With the Chiefs having just selected Fuller, Walsh really had no reason to call the Chiefs. It couldn't have been an attempt to downplay their interest in Joe Montana, considering a rebuilding team wouldn't have spent two sequentially high draft picks on a quarterback anyways.
What would be his motivation for calling, other than to make exactly the point he made?
As great as he was, Walsh had a notoriously large ego and would be willing to take credit for anything he could. Such an insecure man would not allow his legend to be tarnished a bit by admitting he was not that big of a fan of Montana's heading into the draft.
Dickey came to this conclusion:
"John Ralston, an executive with the 49ers the year Montana was drafted, and Tony Razano...have each claimed that Bill Walsh had to be talked into drafting Montana. Their story is that Walsh wanted to draft Steve Dils, who had been his quarterback at Stanford...In Ralston's version, he was the one who convinced Walsh. In Razzano's, he is naturally the hero."
Incidentally, in The Genius, it is noted that Fuller was close to the top of the board before Walsh worked him out. That still wouldn't explain why he felt compelled to call Marv Levy, though.
Dickey continued: "In one of these off-the-record talks before the 1979 draft, Walsh had praised Dils's intelligence and courage but doubted that he had the physical ability to be a standout in the NFL. He didn't want to downgrade his former quarterback publicly, but he also wanted me to understand why the 49ers wouldn't draft Dils, whom he projected as no more than a backup quarterback in the NFL."
Perhaps the manipulating king himself wanted to convince everyone in the draft room he wasn't that interested in Montana so that it wouldn't leak out. Dickey goes on to make the point that Walsh would not have been able to be coerced into taking a player he didn't believe in. Maybe he believed in Montana right before the draft, but it wasn't until he was convinced by his entire staff the weeks leading up to the draft. There is really no way of knowing for sure and we probably never will.
I feel Dickey sums it up best: "Everybody wants to be known as the one who discovered Joe Montana."