I've been wondering about this. Alorth's reputation is still pretty good since he has other projects that are moving along just fine, but he's still taken some damage over his involvement with Dammed. We bitch and moan about the only progress being wallpapers, but that's the only part that doesn't rely on Dammed, so of course that's all that's happening.
If I were Alorth, I'd be telling Dammed to get his shit together too. There sure as hell aren't going to be any other artists running to hitch up to him, so he'd be stuck making his games with the same garbage graphics as Polarity.