I found the TV Tropes thing that mentioned the Sonic CD coding lost, in the "edit history" page for Keep Circulating the Tapes, which for some reason was removed from the page (along with info on the few Sonic games that haven't been rereleased on later systems). And I saw that it did mention difficulties in emulating the system in addition to the coding being lost.
Not to bring this thread off-topic, but I know of an unreleased Sega CD game that has recently been released for the iPhone. There were plans for a Penn and Teller game, which would have been a series of mini-games, including one that was a bus drive that took 8 hours to complete, with no stops, no picking up customers, and nothing to keep it interesting. Just 8 hours of driving a bus, and the pause button wouldn't even be able to work in this game (I wonder how they could pull off the lack of a pause). I don't know if the whole game is downloadable or just the bus driving portion. Can't remember the name, but I wonder if they recoded that.
I also wonder if emulating software for rereleases on other systems is what has kept Virtual Boy games from being downloadable on the 3DS. Yeah, the Virtual Boy was a failed system, but at least according to The Angry Video Game Nerd most of the games weren't that bad, they just missed the point of virtual reality (and lack of sales for the system prevented the games from selling).