I guess Stipa didn't realize that a wimpy looking 2 blade prop was not going to make the air flow do what he hoped. Even modern ducted fans are less efficient than conventional aircraft propellers in cruise conditions, though they are much more efficient for generating thrust at low speeds and hence useful for hovercraft, airships, VTOL applications, etc.
Trying to get more thrust by making the duct tapered is never going to work unless the flow at the throat of the duct becomes choked (and is therefore at Mach 1) which is far beyond the capabilities of the technology Stipa was using. To do that you need an afterburner, not a propeller!
One cause of "all the extra drag" is simply the air flow over the inside surface of the whole of the duct. Air has viscosity. The frontal area of the structure is probably bigger than a conventional design as well. The engine alone (inside the duct) has a similar frontal area to the nose of a conventional plane design. The frontal area of the cockpit is also bigger, because bottom half (containing the pilot's seat etc) is not directly behind the engine and duct, but on top of it, adding more frontal area.