Rejecter, I've had friends get promised the world when a NY house wanted their book only to see the publicity push never materialize. That's hardly a sign of a bad book or a bad writer. No one hardly knew the book was out there. I'd be interested in your take on this.
I've never worked in a publishing house, but I know enough people who have or actively do to presume to be able to answer this question. The answer is complicated and involves one of the last links on the chain towards publication - the "buyer" for the bookstore.
Today, most books are sold by large chain stores, the really big ones being Barnes and Noble, Borders, and that other big one that we don't have on the east coast. All of these book store chains have corporate headquarters that contain people called buyers. These are the people that decide how many copies (if any) the stores will be carrying. Usually there's at least one buyer per genre and/or region. There's the person in charge of buying sci-fi, the person in charge of buying romance, the person in charge of buying literary fiction, etc.
After the publishing house has committed to publishing a novel (i.e. it has signed a contract) but before it commits to how many copies it will produce and how much publicity money it will spend, it produces a few "proofs" - paperback, coverless copies of the text that are sent to reviewers and buyers. From them the house gets a general feeling for how many copies the big chain stores are going to buy. In a cyclical manner, that then determines how much copies the publishing house will put out and how much money it will put into advertising the book. There's no reason to advertise a book if it's not readily available on the shelves at Barnes and Noble if you want to sell a book in Manhattan. Preferably, it should be somewhere up front, in "new fiction." In other words, if the big chains' buyers aren't interested in your book, you are screwed, and the publishing company will drop you down on its list of priorities like you smell of dead skunk.
Part of the agent's job is to make sure this doesn't happen. A competitive agent who truly cares about the material will be talking up the book to buyers and stores. A year before the book is even published, they'll be mentioning it at lunches with editors so that they don't forget about their own project, and shoving proofs in the hands of reviewers so they can get some blurbs. They might hire a publicity agent or do some publicity themselves. But in the end, there's very little the agent can do if the publishing house losses faith in the book for any reason and decides to bury it.
And that is the sad story of the little book that couldn't.