A week ago it appeared that Frey was due to sign on loan from Lille, with the striker even flying over for a medical. Just earlier this week the Nottingham Post reported talks were continuing.
The potential transfer has now collapsed, and manager Dougie Freedman has stated it was his decision to pull the plug on the deal.
He told BBC Radio Nottingham: "That will not happen. Unfortunately with Michael he's not played since January. Where are are right now, with one or two injuries we need a player to hit the ground running. It's a dead deal. We have got to try and bring someone else in."
The decision is a blow for player and club, who had both invested a lot of time into seeing if an agreement could be reached.
Now they are back to square one, and struggled for goals last night, drawing 0-0 at home to Charlton Athletic.
Forest had 20 shots at goal but managed to land just one on target. The Addicks contributed little more, registering two on target from a total of 13 shots.