In many cases syndication masters are used for DVD because the original network masters have been lost.
Universal lost a ton of masters in the 2008 studio fire, but they're not the only studio with this problem.
Sony couldn't find the original network masters for the second or third seasons of Police Story. MGM couldn't find some of the network masters for the first season of Mister Ed when it was released on DVD in 2009. But by the time the complete series box set came out in 2014, they had found them, so that version has the unedited episodes.
And if the masters for a TV show are controlled by an independent entity and not a major studio? Storing that material costs money and (unfortunately) is not always seen as worth the investment.
That 2008 fire destroyed mostly digital backups of Universal films and TV shows and a few film masters (the major masters that were lost were AUDIO masters from Universal Music—-masters from like Bing Crosby, The Carpenters, Louis Armstrong), but Universal Pictures has copies of everything stored there stored in other locations. But, really, for decades, Universal has been known as the worst company to store its stuff (just look at what’s happened to the Disney “Oswald The Lucky Rabbit” cartoons).
And that story about Sony not finding the network masters for “Police Story” (PS was put out on DVD by Shout) sounds similar to the story that Universal gave Shout for “The Hardy Boys” (1978-79) Season 3 (Good Times had used the same syndication master for a Hardy Boys episode that they had released on VHS in 1987—and yet Universal had remastered the series in 1985 for VHS/Betamax release and then done another remaster between 2005 & 2007 for the DVD’s the used a mix of both remasters for Season 1 & 2) . But in both cases I think it’s a case of Sony (& Universal) wanting more money for the network masters and Shout not wanting to pay anything more than what they paid, and Sony just raising their hands and saying “sorry, we can’t find the network masters”.
As for independent companies, I’m just going to bring up Alien Productions and “Alf”. Lionsgate released the entire series between 2004 & 2006 on DVD, but they were given syndication masters by Alien Productions, which Alien Productions claimed were in better shape than the network masters. But back in 2001 VCI released a DVD here in Canada called the “Alf Files”, that featured the network masters for “Alf’s Christmas Special” and “Tonight, Tonight” and a slightly edited version of “Try To Remember” (in order to remove reference to Alf being electrocuted). Via Lionsgate in 2004, Alien Productions claimed the network masters were in poor condition, and would cost too much to clean up, but on the VCI disc, the only episode to show any dropouts was “Tonight, Tonight” (right at the start of the end credits there is one brief line dropout). Otherwise the network masters were utilized in 2009 by Warner Brothers for a European PAL release. Seriously, Alf wasn’t shot on film or Kinescope, it was on videotape, so unless someone doesn’t know how to transfer broadcast tapes correctly (in which case why are they in the business?). then any camera and VTR operator is able to setup a pro VTR deck and calibrate it for a high quality transfer. So Alien Productions claims are highly suspect, unless the tapes are truly unplayable.
And I’ve worked for a few independent production companies and they’ve kept their original edit masters of their shows, even if they don’t release them on DVD or streaming, since they never know when they might need a shot from an old episode.
Of course then you have things like L’Oreal-Hallmark purchase of Filmation and their poor handling of the transfer of Filmations owned shows to just PAL Digital masters, and then throwing out the film masters, since Hallmark was only concerned with international distribution at the time.
