He was trying to distance himself from Bill Clinton as much as possible. Remember, Clinton was still quite unpopular at least on a personal level c. 2000 (despite the public viewing his overall tenure in office -particular on the economy - quite favorably). And IIRC, Lieberman had been one of Clinton's harshest intraparty critics during the Lewinsky scandal era.
Keep in mind, though, that running mates didn't usually make much of a difference to election performance even back then (and to a greater extent than one might think, that's still true).
This. Lieberman was a smart choice. Conservatives could not attack him frontally (I believe Lieberman had supported school vouchers). Statements that Shaheen or Graham would have been a better choice are 20/20 hindsight.