He did fade out, actually. My plans for him pretty much went down the drain when Sukohn's memories were wiped. I was planning on Sukohn blackmailing him into helping Sukohn. Plus I was going to get Sukohn to tell Temrash that the Yeerks lost.
Last I posted for Derrel, he was sitting at the bar using money he made for doing some work for the barkeep. I don't actually know what to do with him now, but if you have something in mind I can bring him back.