There's actually a deeper story here, and more interesting lessons.
(But first, just to clear something up: that $500k sale price is very misleading because Digg was sold in three parts, and only one part was $500k:)
in July 2012 Digg was sold in three parts: the Digg brand, website and technology were sold to the current owner, Betaworks, for an estimated $500,000; 15 staff were transferred to the Washington Post's "SocialCode" for a reported $12 million; and a suite of patents were sold to LinkedIn for about $4 million.
But anyway. The $160 million valuation isn't sourced, but it seems unlikely they could ever have gotten that... because they tried like crazy! At their height in 2007, TechCrunch said:
There is no good reason to sell Digg when it continues to grow like a weed. But that doesn’t seem to deter Adelson and Rose from trying to dump this thing at every opportunity.
But they couldn't make it happen. A year later, in 2008, Google tentatively agreed to buy them, but then backed out during the due diligence phase.
That pretty much killed off any remaining investor interest in the platform. If Google thinks you're rotten, other buyers will think twice. Rumor was that Google backed out because the tech in the site was garbage. Those rumors were given credibility when Digg started rewriting their entire website from scratch. This was the "v4" site launch that was so badly handled.
I think bad tech -- and a desire to fix too much too quickly -- had as much to do with Digg's death as anything else.
So reddit is probably looking at Digg as a warning case, but not the way you'd expect: they see that Digg had major tech problems and tried to fix them, and... they imploded. So reddit is very scared of making any significant changes to their architecture.
And reddit needs big changes to make users happy. Even the most basic stuff is broken: there are service outages daily. But fixing the tech will require major rewrite, and that's incredibly risky, and they are dragging their feet.
My guess? They are quietly shopping reddit around to buyers. For that purpose, they want their cash intake to look good, and they don't want to do anything "stupid" like Digg's v4 launch.
They have deftly managed PR in the past -- not here on Reddit, where they are godawful at it, but elsewhere on the web, where potential investors look. Remember earlier when they announced they were "cracking down on abuse"? Everybody on reddit yawned. It was a patently stupid announcement. But it got very positive PR coverage. (Like this.) A lot of what they do is for show, to make them look better to potential buyers.
So... it seems unlikely to me that reddit is going to suddenly start making major code changes to their website. I've been wrong once or twice before in my lifetime, but if I were a betting man, I'd bet that they are going to 1) continue to try to sell the company, 2) fail to sell the company, and 3) implode.