The heavily produced Soviet BT series wasn't totally useless, although they were not up to the same standards as the Panzer III. They had excellent speed and decent cross-country capability, the armor wasn't absolutely awful, and the 45mm main gun was at least "adequate". Poor training (many tank gunners had only ever fired three or four rounds in training), limited communication (only the command model had a radio, unlike the T-34s which all had radios - usually non-functional), a 2-man turret, and obsolete doctrines (often leaving them unsupported) turned those somewhat borderline armored units into little more than a row of coffins when confronted with German AT guns. The T-26, on the other hand, was already an ancient relic, and was only acceptable in the role of a semi-mobile pillbox, but the Soviets had thousands of them, and used them.
Retiring the obsolete T-26 and spending more training time on a smaller number of tank crewmen for the BT-7 and new T-34 (only introduced as a "stopgap" design until a "final" one could be developed), might have provided a more effective armored force overall, rather than trying to swamp the Germans by the sheer number of slow and pathetic T-26s, and only half-training a larger number of crews who very likely wouldn't live to see a second combat.
Remember that the Panzer III was originally fielded with a 37mm gun, and up until the start of Barbarossa, only a relatively small portion of them had been produced with the 50mm "medium barrel" L43 (43 = ratio of barrel length to bore diameter). The longer 50mm L60 gun had not yet been added. The Panzer IVs, as well as the StuG IIIs, still had the short-barrel 75L24(?) gun for delivering HE rounds, not the 75L48 anti-tank gun that was just being introduced with the F2 and G models, and were no more effective against armor than the Panzer IIIs. The Panzer II was still being used in fairly sizable quantities, with a 20mm auto-loading gun poorly suited for use against armored targets, and vulnerable even to portable AT rifles (which the Soviets fielded in quantity). Most, but not all, of the feeble Panzer I models had already been converted into either self-propelled artillery or armored munitions carriers.