Why would Warner allow this title to enter the public domain? To my knowledge, it's the only Flynn film to slip away that he made under contract with WB.
Warner didn't allow this film to slip into the public domain. At the time the copyright on the film was failed to be submitted for renewal, the film was (as were all pre-1949 Warner features) owned by United Artists. They were the ones who neglected to have the film properly renewed and protected. (The film ended up back at Warner by virtue of their purchase of Turner who had purchased that library during the 1986 transaction wherein Turner had also purchased the MGM library).
This is a shame, for usually a film's status as "public domain" usually precludes a legitimate, high-quality version from being available on DVD. There are a few exceptions (HIS GIRL FRIDAY from Columbia, RAIN from Kino, SHERLOCK HOLMES films from MPI), but the public domain outfits that glut the market with crappy versions really kill most profit potential for the studios who actually own these films and their original elements.
The Roan Group has released this title and other PD titles from the Warner library on Laser and DVD. (such as SVENGALI, THE KENNEL MURDER CASE, etc.) Although these films will probably never get the full restoration treatment, these releases are from the Turner masters, so they don't look bad at all. I don't know if this is an "under the table" type of thing or maybe Roan made a deal to release these in exchange for Turner showing things like WHITE ZOMBIE from Roan's catalog.
If all this means that this film will not get a nice looking release then that's too bad. I've always liked this film, and have never seen a nice transfer presented in any medium.
Believe me, I am a big fan of Sana Fe Trail as well and the double release on DVD from Marengo Films is excellent. The print appears to be the same high quality as the Turner print shown on TCM. It is paired with Abilene Town as well.