Milosevic and 90% of the other politicians in Yugoslavia's last years were products of their time and its mentalities. Many of them were cynical and self-serving, but all saw which way the wind of public opinion was blowing and made sure to at least vaguely follow it.
Strong central authority benefits the largest nation (Serbs) the most, so a weaker central authority should be more desirable. On the other hand, the internal borders of Yugoslavia were drawn up in a way which left massive populations of Serbs outside Serbia, without any autonomous provinces and such.
So, with weak central authority, the Serbs felt forcibly separated and vulnerable to the domination of others; Kosovo was especially responsible for fueling this mentality, while ethnic relations in Bosnia and Croatia were not as bad. Thus, for the Serbs, strengthening central authority was absolutely necessary, and for Croats, Bosniaks etc. strengthening central authority was absolutely unacceptable.
Basically, the communist model of federalization was stupid for two major reasons: it was federalization without democracy; and it was federalization without self-determination. Instead of trying to at least somewhat respect the desires of various communities, the communists divided the country into a bunch of random territories and called it a day.
The Cvetkovic-Macek federalization from older Yugoslavia would have been, with one or two additions, a much better model to work with. Adopt something like that, make central authority as weak as possible and the country should have a much better chance of staying (formally) united. Of course, getting the Communists to think along these lines would require some major changes in the pre-war history of the Communist Party, maybe even in the mentality of the Comintern itself.