Yes, Luther was wrong, of course.
russianpropagandapurveyor, you question does make sense. As I see it, the current situation leaves us two options:
-Accept Vatican II and also accept that Catholicism can change completely. If Vatican II is legitimate, then the Pope can change absolutely everything and it will still be Catholicism. This is obvious a false idea.
-Accept that the Church was somehow corrupted and that the false doctrines of Vatican II were promulgated as true by the highest authority. This is Traditionalist. How it was possible and how to react to it is what Traditionalist have been trying to do for the last 60 years or so. There is no definite and final answer, but we know that this is the only viable option, since the alternative basically mean that Our Lord's promisses were false.