Newport Gwent Dragons director of rugby Lyn Jones claims Dan Lydiate's "head was turned" before he spoke to the player about a return to the region.
Players coming back to Wales on dual contracts, must first be offered back to their region of origin.
But flanker Lydiate chose to join Ospreys instead of his former side, "principally for family reasons".
"There's an element of disappointment," said Jones.
Lydiate, who played for the Dragons between 2006 and 2013, reached an agreement to leave Racing Metro after just 17 months in France.
The 26-year-old struggled to hold down a first-team place at the French side.
In November, it was announced the back-row forward was among 12 players to be offered dual contracts by the WRU.
The list has been drawn up by Wales coach Warren Gatland, who has worked closely with the Ospreys, Newport Gwent Dragons, Cardiff Blues and Scarlets.
Former Wales international Jones believes the Dragons were never in the running to re-sign the Salford-born player.
"I spoke to Dan as soon as the rumours [about him returning to Wales] began," said Jones.
"I first of all needed to clarify why he left in the first place and it was quite evident why.
"I tried to tell him that things had changed somewhat, but I think his head had been turned before I could speak to him about what the future could look like.
"Since that telephone conversation many months ago I haven't thought much more about it."
Lydiate has started training with Ospreys and is likely to make his debut against Ulster in the Pro12 on 20 December.
Dragons head coach Kingsley Jones told BBC Wales Sport that he "respects" Lydiate's decision.
"I think Dan's mind was possibly made up is what Lyn was saying," said Jones.
"We'd love to have him back here and I think what Lyn also said is we feel a little bit disappointed and let down, but we also understand Dan's experience.
"We respect Dan's decision.
"He's played for the Dragons for a few years and he wants to try something else in Wales, possibly because of his experiences here."
Jones added that the failure to sign Lydiate highlighted the challenge faced by the region in attracting the players they need.
"We want to try to build something and enticing those top quality players back will take the team to where we want it to go," said Jones.
"But it's a difficult challenge for teams at the bottom to bring such players in."