Other FUD, on 3DR's forums, is different. The allegation is that George Broussard asked for $5M from Take Two, which has the right to publish DNF, for continuing costs. Supposedly, Take Two declined to bet $5M on 3DR being able to get DNF to market before the $5M ran out and offered to sell the publishing rights nack to 3DR for $30M. Which seems rather a lot - maybe they're still annoyed at George Broussard for him telling them to be quiet...only he didn't say "be quiet".
But we're in the dark as much as we have been for the last 12 years.
It's a shame 3DR created a brilliant game (DN3D) with such a memorable character...and then so utterly bodged the job of a sequel, bodged it again and again for 12 years. They had the talent, so what went wrong? We can speculate, but we're unlikely to ever know. My opinion:
i) They were perfectionists who became deeply caught up in DNF, ever more so as more and more of their lives were spent working on it. This made it psychologically difficult to even seriously consider the idea of saying "it's finished" and releasing it to potential criticism around the world.
ii) They were great game developers but not so great businessmen. There have been claims from ex-employees of constant reworkings, poor oversight, lack of communication, etc. People being assigned to a job, spending weeks on it, lower management saying it's fine, then upper management looking at the finished job and binning it, having not looked at it at all during the work. Over and over again.