"Indie" is a hugely inaccurate term (hey, it can join the club along with "IDM", which nobody dances to, and "progressive rock", which is more or less permanently mired in the 1970s), but I wouldn't call it "archaic" by any means. I mean, how would _you_ describe Death Cab for Cutie or Yo La Tengo?
First off, I don't think Time magazine _really_ meant "influential", otherwise they wouldn't have named albums that came out last year. Not much time for them to be influential, is there?
Were Nirvana influenced by Sonic Youth? Yes, but they were also influenced by the Wipers, the Meat Puppets, the Raincoats, and Half Japanese. Should those bands be put on the 100 top albums of all time too? Radiohead influenced by Sonic Youth? No, I really don't hear that. (And again, if you're going to put someone on the list for influencing a more famous band, you'd have to put fucking Autechre on the list, and I don't think anybody wants that.) Hole and Pavement shouldn't have been on the list anyway, so that rules them out.
I also think you're vastly overstating the importance of Sonic Youth. Yes, most bands today have _heard_ of Sonic Youth, but that doesn't mean Sonic Youth are a major influence. I mean, come on. How much Sonic Youth do you hear in The Shins? How much Sonic Youth is there in Belle and Sebastian? Sonic Youth may be cool to namedrop, but I don't think they were in real terms any more influential than, say, the Butthole Surfers.
The Cure and Joy Division don't belong on the list either. Not if you're going to cut it down to only 100. If it was a list of 500, sure, but not 100. The Stooges you could argue either way. I don't think it's a crippling omission to leave them off, like it would be to leave off REM or U2.