Chicomdk's report of the producers making big money and retiring is the reason I had always understood for no sequel. I remember an interview with Lee Horsely somewhere, and he gave the reason as (words to the effect of) 'the physical demands of the character and the script were beyond the cast, who didn't look forward to the rigorous and punishing schedule' or something in that vein. At the time it sounded almost like he was embarrased that the people behind the scenes had abandoned the project, and was trying to stifle the discussion. However, despite the huge financial success the film was pasted by most reviewers (who maybe didn't quite get it), so maybe he was just trying to distance himself from the project to protect his prospects.
I've loved this movie since about 1984 when I first saw it - my friends now think it's schlocky hocum, but I'll talk them into making the damn sequel myself if no-one else does one! I'd love to get my hands on the script they originally prepared. (hey, I'm serious). Never mind Lee Horsely reprising the role in a 'last aged adventure' kind of Conan-the-King way (altho' he was imo excellent as Talon, tongue firmly in cheek), who could we cast instead? Answers and suggestions appreciated...
Just a quick trivia - apparently scenes were shot at a cheap Vegas motel, because it had the whole 'Arabian Knights' look going on.
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