Having had the chance previously to ask both Bassett and Dempsey about this previously my understanding is a little different. Harry wanted Demps to be his Dennis Wise of the team and play the same role that he did for Wimbledon, Demps being brought through the Man Utd juniors didnt fancy this and they mutually agreed he would move on. I believe before this decision was made that a new contract had been offered to Demps. It may well have been a decision that he went on to regret!
He's had his time though as a very successful coach and has always been highly regarded by Sir Alex and went back to old trafford when Solskear was appointed manager, he still remains there today having been the u21s manager last season. A top bloke who still has lots of time for us.