Mackay had been expected to take over at Selhurst Park yesterday but the appointment did not materialise. Reports then began to emerge that Cardiff City had submitted a dossier to the Football Association exposing a collection of lewd and offensive text messages allegedly sent while the Scot was working as manager at the Welsh club.
The former Celtic defender, who won widespread sympathy after being sacked as manager of Cardiff last season, has been the subject of an expensive and thorough legal investigation by the club, who have also probed the conduct of Iain Moody, the former head of recruitment at the Welsh club.
Moody is now working at Palace and, as a Mackay ally, had been perceived as one of the main reasons the 42-year-old was viewed as the ideal replacement for Tony Pulis, who resigned late last week.
In a further development, Cardiff are understood to be considering legal action against Palace over the leaking of their starting line-up last season. Palace were found guilty of breaching Premier League rules earlier this week and fined following a four-month probe into the incident in April, when Cardiff complained that Palace knew manager Ole Gunnar Solskjaer's team before the sides met in south Wales.
Palace, who won the game 3-0, denied the claims against them with sporting director Moody, sacked from a similar position at Cardiff earlier in the season, saying it was "incredibly, extraordinarily untrue" that he had any involvement in any wrongdoing.
However, the Premier League ruled Palace had broken rule B16 which states clubs must behave towards each other "with the utmost good faith". Yet despite that verdict Cardiff, it seems, do not want to let the matter lie.