I feel about as skeptical of this information as I did about the person whose mom works there, said it was lost in storage, and that it hasn't been digitized due to an unwritten rule against it. And there have been a number of times I believed similar-sounding info that others were skeptical of (especially info that turned out to be true). I hope I am wrong in being skeptical here.
The main thing I am skeptical about is that Craig Sherman said it. Craig Sherman is a historian at The Jim Henson Company, but I don't think he works for Sesame Workshop (though the two companies work together). Maybe he does have more active involvement there than I would expect, maybe he is an official employee at both places and I don't know it, but this seems like something I wouldn't expect The Jim Henson Company to know. But this is one thing I really hope I am wrong about.
In thinking about what was previously said about the unwritten rule about not digitizing the episode, I thought about the old article that said they digitized every episode, and started thinking it might be better/easier to say that they digitized every episode instead of "we digitized all but one episode". And saying that in an article would open up a lot of questions.