There are many potential reasons for Melinda Dillon not returning to 'A Christmas Story'. She could be focusing on other aspects of her life, like spending time with family. Additionally, the new producers or directors might have a new vision for the project that doesn't involve her character. It could also be that she had a negative experience during the previous work on it, although this is just speculation. There may be financial or contractual reasons as well that are not made public. For example, if the new production budget doesn't allow for her salary or if there were issues with her contract renewal.
It might not have a huge impact if the story can be told without her character. But some fans might be disappointed as they were used to seeing her in it.
Yes, she was in it. In the new Christmas Story, Melinda Dillon's performance was quite notable. She played her part with grace and skill, helping to create the warm and festive atmosphere that is characteristic of Christmas stories. Her acting was one of the elements that made the new version of the story engaging and enjoyable for the audience.