I've heard that they have problems with the Activision's rights. Any TT official news or reference about the game (aside this forum thread) was deleted. They had a placeholder website similar to the Fable one, and it's not available anymore.
The last statement about it was "The genre doesn't need us anymore".
No official comments on the forum aside Mods, the last one being one year old.
Telltale's King's Quest R.I.P.?