There are two ingredients for the "Bill to Wisconsin" Non-Story to emerge: Success and Status.
Bill definitely has the success. And Wisconsin views its coaching job as a step up, even though it hasn't been to the NCAA Tourney '02. This was probably a reporter or blogger putting his/her finger in the air and saying "Here's a list of coaches UW could probably poach from some school that's beneath us" and Bill was on the list.
Now, Wisconsin would be stupid not to call and gauge interest. And Bill would be stupid not to listen. UW is a better job for two reasons: he may be able to wrangle a bigger paycheck and its a much easier place to win because of the Big 10/11/12.
According to Real Time RPI, The Big 10 ended the year with 4 teams int he top 50. The Big 12 had 7, with 4 in the Top 25. While this may have been a down year for the B10, I suspect it was a typical year in the B12. Life would be easier in Madison.
But I suspect Bill is happy in Ames. Expectations are reasonable. Fan support is crazy. He may not be interested in another rebuild. Sometimes when things fit, you don't mess with it.