Paramount Studios had intended to release The Keep on DVD in 2004, but this would have been the (frankly incomprehensible) version, edited down to 96 minutes from Mann's original 180 minute version, and the release was shelved for no apparent reason.
The edited version seen in theaters and on VHS is indeed pretty poor and doesn't make a whole lot of sense, due, I would think, to being only half a film!
There appears to be no clear evidence over who is blocking the film, and I am not convinced that Mann has enough power to do so, but efforts have been underway for a while now to get a full, director's cut, release made. You can follow these efforts on this fan-run site here and sign the petition here. This site does include a fascinating interview with Mann from 1983.
Incidently, a graphic novel was produced, which F Paul Wilson adapted himself.