Maybe they could rope some of the talented modders into un-nudifying the game and fixing the bugs? Or, at least giving modders permission to tinker with the source code? I dunno. The modding community and die-hard fans would probably love to help un-bug the game.
There's a long-standing rumor that the Daggerfall source code no longer exists, that it was lost during a move. Anyway, it's been firmly and officially stated that it will not ever be released. http://www.pbm.com/~lindahl/mel.html could rebuild it from a disassembly anyway, even though that would be flouting the EULA.
As for "M" rated games... doesn't make sense. Can't games be grandfathered, as far as ratings go? And it isn't against the law. There is no federal law that says games must be rated and can't be sold if they are of a certain rating blah blah blah. Seems very silly, if you ask me. You don't see the ESRB applying ratings to the Greek sections of museums: "Oh noes! nvde lady and naked dude! Don't let the kiddies in!"
There's no law preventing distribution, in the US anyway, but companies in the video game industry have gotten mighty risk-averse since Hot Coffee and the Oblivion rerating fiasco. Selling directors on releasing something that could damage their image for zero return is a tough sell. And there would be no closing her gown after Azura's boobies got out