Well, to be fair, he had gotten so involved with SS behind the scenes in addition to performing Elmo (i.e. producing, directing, and the like), it probably took up a lot of his time that returning to the west coast to do anything with the Muppets was probably not very practical for him. Similarly, Joey not only directed but became head writer by Season 40, and that likewise probably explains why he drifted away from the Muppets after KSY. Not to mention, SS remains in steady production, the Muppets haven't had much in the way of stability in a long time - gotta go where you're gonna get work if you wanna pay the bills and such.