Other sites, such as Trulia, do not have rules about what properties can be submitted to appear online. Of course, in order for a broker or agent to submit a property listing, he/she must have a contract w/ the owner/seller for marketing representation.
So, yes, a property can be marketed and appear on websites. A buyer must be told the accurate status and availability. Example: A property has a contract, but the buyer has a contingency. It is common for the seller to continue to show the proeprty and expect their agent to continue to market it.
I am sorry you transaction did not come together.
I guess I don't understand what you are asking because in the end, you didn't go through with the purchase anyway. Am I missing something? If you were asking if the seller could have negoiated another offer during this period, NO. They could, however, have taken a "back up" offer in the even that the home purchase did not go through.
Hope this answered your question to some extent.