Ciji's songs were on Lisa's LETTEROCK album, not necessarily written for the show. The songwriters would doubtless require compensation. Even "non-hit" songs have rights issues. Cathy's Top 40 covers would be more expensive, although she too sang "Lisa" songs (DON'T YOU LOVE ME ANYMORE was an OLD Lisa song from the 70s).
But I don't think song rights have anything to do with future seasons of KNOTS not being released. The first two didn't sell. MANY series released on DVD were never completed, including THE NANNY, THE FACTS OF LIFE, etc.