Dyche said the team are “still a work in progress” as Forest look to get back to the level on the pitch they were at during his time in the academy.
“When I was here 1987-90, that team was finishing regularly in the top six of the old First Division and winning the Littlewoods Trophy [the EFL Cup] as it was then,” he said.
“We’re not quite there yet, the fans know that and the club knows that, but it’s about building that momentum and obviously it’s just lost its way a little bit.”
Dyche left Forest for Chesterfield in 1990, spending seven years in defence with the Spirerites, before playing for Bristol City, Millwall, Watford and Northampton.
He has been out of work since a two-year spell at Everton ended in January, having previously spent 10 years as Burnley boss until 2022.
Speaking about his Forest past, Dyche said: “Everyone knows down the years I’ve spoken about my affection and the beginning of my career which was under the great Brian Clough.
“I didn’t quite force my way into the first team, I had three years as an apprentice and a young pro and learnt so much.
“I have fond memories of wandering down the Trent with Del Boy [Clough’s dog] running past your feet and hearing the boss’ voice in the distance. It’s a strange thing to be back, but it’s a good thing and a very pleasing thing.
“It’s one of those things, you imagine one day could it be? Not in the early days of my managerial career, but as things started changing in my career and changing at Nottingham Forest, new ownership comes in and the growth, they have made you wonder.
“It’s come round my way, I’m very pleased and proud.”
