Torch is an expensive, and probably even dangerous prop to work with, so that is why he has not appeared in very many films. Charles Band however commented on the Blu-Ray commentary that he would like to see Torch return, but don't take that as a guarantee.
Part 3 was a prequel anyway, set long before he was created so that can be blamed on surprisingly good continuity. This series is not well known for that.
I'm not sure why he wasn't in Part 4, but is in its direct sequel Part 5. According to the director Jeff Burr both films were in early stages meant to be one film, but dividing them into two may have resulted in several scenes being cut from the script(s), and therefore maybe even omitting Torch's scenes from Part 4 altogether. That or most of the original planned film was used in Part 4, leaving new scenes needed for Part 5, and perhaps Torch was really nothing more than filler to help make the next film feature-length, continuity be damned. But these are only my theories.
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