The original deal was for a permanent transfer with Krzysztof Piatek as apart of the package. The complicated nature of selling someone like Icardi to Milan was one of the blockers in the deal it seems. The package would have to have been just so in order to satisfy both sides.
In the end, the PSG loan was much easier for both Icardi and Inter. However, when Icardi returns to Italy this summer, a move away from Inter seems likely. Perhaps a more coordinated Milan move would result in something concrete should they still want his services.