He was supposed to come back with MK, but MK decided to stick to Danny on drums, so when his problems were solved or less important, he found that he had free time to work with other artists and, yes, he did a record a tour with Neil Young.
My guess is that there is something else, as MK and also none of the rest of musicians talked again about Chad and what happened. Jim left the band for ear problems, and we saw him in some diary entries going to MK shows as a guest, and he came back to the band, but Chad Cromwell... apparently their paths didnt cross again.