Could someone please explain to me why the name the Fighting Sioux would be considered derogatory by Indians?

It is very interesting that the article neglects to say whether the Sioux support the team using the nickname. Many Sioux tribe strongly approve the use of the name "Fighting Sioux" in the name of the University of North Dakota. "The members from Spirit Lake behind the lawsuit assert that many of the American Indians opposed to the Fighting Sioux nickname are simply from tribes other than the Sioux, and are jealous of all the recognition." From Fox News:

University of North Dakota teams risk forfeiting any post-season games if their athletes, cheerleaders or band wear or display the school's Fighting Sioux nickname and American Indian head logo, an NCAA official said Wednesday.
Bernard Franklin, an NCAA executive vice president, said in a letter to university provost Paul LeBel that the university "must forfeit competition" if "it has not adhered to this requirement" in any post-season games that UND teams have been invited to play in.
"We ask that the university take measures to minimize or eliminate the presence of the imagery or nickname brought to an NCAA championship venue," Franklin's letter says. . . .
In March 2011, the North Dakota Legislature approved a law that required the university to use the logo and the Fighting Sioux nickname, which it has had for decades, despite the threat of NCAA sanctions. . . .