Does being indoors hurt a dog for hunting? Never heard that before.
I personally do not think so. Over the years my dogs have been both in and outdoors and I've had good and bad in both batches. In fact, I would say the vast majority of "good" dogs I've hunted over (mine and other guy's) have been indoor dogs.
Environmental factors such as dry conditions vs. moist are can be a big factor on dog's ability to get a good sent.