It is Naruto vs. Neji, shadow replication vs. the byukugan. Neji underestimated Naruto's skills, but even with a cleverly thought up plan, Neji's advanced ninja techniques that are on par with jounin level techniques overwhelm Naruto. The entire Hyuuga family is taken by storm when they see him perform the divination wind. For some reason Neji decides to tell Naruto about his family history and how fate decides everything.
The episode opened up with what seemed like a promising battle, and then Neji had to tell a story. I hate it when things like this happen; after two people duke it out for a while, one of them decides to tell them about their sorrowful past and the battle ends with that person changing his views on life completely. Sure I guess Neji's story is pretty sad, but he should be pounding Naruto into the ground, not telling his frikkin past.