Libertarianism has been a core component of Conservatism since the late 1970s at the very least. To be frank, I find this modern crowing of Libertarians as somehow suddenly in ascendance and all important to be hilarious, because it shows how politically illiterate they actually ARE when it comes to the historic political coalitions.I largely agree with you, actually. Libertarian stuff is happening but economic libertarianism outside of free trade and immigration isn't. You think that mainstream parties co-opt a lot of libertarian policies, so people don't really care about the libertarians themselves?
The dominate Conservative philosophy of the 1980s, the one Ronald Reagan primarily held to, and the one that still is more or less the standard that everyone varies from, was called "Fusionism" and involved three core ideals: Social Traditionalism, National Defense, and Libertarianism. These three were so critical that Reagan described them it as a "three legged stool", which is a very interesting concept since a three legged stool cannot stand without all three legs, but it ALSO does not wobble.
Historically, Libertarians who actually CARED about Libertarian ideals joined one of the two major parties to influence them, and historically had a lot more influence in the Republican party and Conservatism in general. You can see this by who the most influential Libertarians in America have been over the last thirty years: the Pauls.
However, the Libertarian Party and many of those who describe themselves as "Libertarians" rejected the alliance with Republicans because they were not actually concerned about Liberty for the population and limiting the scope and influence of the Federal government in the average person's life, rather, they are really more about being Libertines. Look at their core concerns: sex, drugs, and money, and rejecting the limits on those placed by Social Traditions and responsibility. In that sense, they have much more in common with Progressive Leftists than with Conservatives, because they are primarily concerned with themselves and their ability to pursue self interests, and see the Progressives as enabling them to pursue their hedonistic desires.