it is probably not so accurate to say the project is "closed". wikipedia says it is "completed" (2007) as basically a "proof of concept" type project. the code is nearly open source and still available for researchers to build on. the site is still available. one "deliverable" of the project can be seen as academic papers of which there are many available.
the goal of the project was re-architected design principles/design patterns (massively refactored/streamlined) for a future operating system, not nec. built by MS. such a system may still be possible. it seems likely that some of the ideas may already be circulating in new OSes eg Android and/or new versions of Apples OS & also some variants of Linux.
not all R&D projects in microsoft or other corporations are slated to be converted directly to products. especially from more pure research, the results may not be "productizable". from GCs article
Microsoft officials often publicly downplayed (at least publicly) the significance of Singularity -- not wanting company watchers to consider a research project a threat to Windows, one of Microsoft's biggest commercial cash cows. But at least one member of the Singularity family, Midori, may still end up a commercial project at some point.
in other words the new design was so different than the old that it could not merely be incorporated as an enhancement. its a very ambitious near-revolutionary rework/ground-up redesign of the entire operating system. one can see eg with Vista that there were massive initial feature ideas (such a as a rework of the filesystem architecture) that turned out to be too ambitious to carry out and was scrapped.
in other words, somewhat counterintuitively Windows may now be considered to be a legacy system running on a PC. in earlier history there were no legacy systems running on PCs because they were so new, it was more a mainframe concept. but after nearly 2 decades of Windows on the PC, its in unequivocally in many ways approaching legacy system symptoms/status.
it is a very large amount of code, increasingly unwieldy to maintain/change, that cannot be changed in major ways without causing major breakage. another relatively new concept to describe this is technical debt.
a classic book describing the powerful/overwhelming inertia effect of attempting change in large codebases is Brooks Mythical Man Month.
other aspects to consider are Microsofts competitive position in the industry which has faded somewhat in recent years, making it less able to pull off/carry out very bold and game-changing new designs and making it necessary to prioritize (and yes cut) some projects. Microsoft routinely goes though massive internal reorganizations which it is involved in currently with the departure of the longtime ceo Ballmer.
a reality of applied CS principles in industry: complex internal politics not entirely grounded in technical merit/finesse or gamechanging potential plays a role in what projects live and die in Microsoft or [quite similarly] any large corporation. it does take on Darwinian aspects at times esp in the fast-moving/evolving IT industry where one leader, Grove of Intel, also espousing/emphasizing its Darwinian aspects, famously said "only the paranoid survive".