The Nittany Lions gave up a two-goal lead with under four minutes remaining in the third period.
Seth Lundy's 18 points and John Harrar's fifth double-double of the season were not enough to beat the Spartans.
Diaz has 24 years of collegiate coaching experience and was most recently Miami's head coach.
Wisconsin entered the game with a seven-game winless streak.
Saint's will be replaced by Philadelphia roasting company Elixr Coffee.
Officials said crew members climbed to the building's roof and found only one of the Computer Building's air ventilation units was functioning fully.
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