You may have noticed that Fusion Gameworks is now an indie developer. As a result, they won't be making any more games based on copyrighted IPs like Mario or Mega Man. Which is fine really. After all, Nintendo seems to be harsher to fan game devs than ever before, and the fan game scene is one that doesn't exactly provide any good ways of making money. It's not really a field any long term game developer should probably aspire to stay in.
But I'm not a typical game developer, and this won't affect Mario's Nightmare Quest.
So no, this game isn't cancelled like Super Mario Fusion or Mushroom Kingdom Fusion are. It might not be here in future (since the forums are going away pretty soon). But it'll keep going none the less, and I intend to release the final version in the next couple of years or so assuming I don't get distracted.
After that, I will quit game development forever. It's not a bad hobby to have, and I did learn some interesting things in it, but I just generally don't about game development all that much compared to writing or running a business.
In other words? Mario's Nightmare Quest isn't cancelled,
though it might have to leave Fusion Gameworks when the forums close down. After it's done, I'll be done with game development along with it, and will not go into indie game development simply because it doesn't interest me.
Hope that clears everything up!
Edit: No, the forums aren't closing down now. But this game will probably have to move to Gaming Reinvented/Gaming Latest/Wario Forums soon, since Fusion Gameworks isn't supporting fan game projects any more.