This is a follow-on question from:
https://www.reddit.com/r/AskHistorians/comments/1w2qbq/as_another_small_nation_why_wasnt_albania/
which has been aged-out for replies.
Well its all started before Yugoslavia became at thing.
Kosovo become part of Serbia as a result of the Balkan League's victory against Ottoman Empire in First Balkan War. In 1919 Serbia become part of Yugoslavia, and Kosovo was just part of Serbia, who happened to have large Albanian population.
Also- Albania was not excluded per se. It was simply never invited.