I think they were turned down because they were on the brink of bankruptcy as long ago as May 2001 (maybe before) and probably would have filed bankruptcy anyway if the events of Sept. 11th had not occurred.
From Vanguard press releases:
As announced on May 1, 2001, a group of existing shareholders of the Company are investing up to $7.5 million in the Company in exchange for newly-issued shares of common stock, at a per share acquisition price of $0.20. NASDAQ granted the exemption due to the Companys critical need for funding to remain financially solvent. The Company had represented to NASDAQ that, without this funding, the Company would have been required to file for reorganization under Chapter 11 of the Bankruptcy Code.