Back when I was the online coordinator for TSR, there was a lot of misinformation running around the internet about some TSR and D&D stuff—urban legends, as it were.
One of the most common one was “TSR had to remove the Cthulhu and Elric chapters from the 1st edition Deities & Demigods book because it they were sued over a copyright violation.” In fact, many people used this “fact” to accuse TSR of hypocrisy during the “TSR online policy” debacle of 1994–1997 (when TSR was [rightly] clamping down on scans of books and [wrongly] on derivative works like homebrew monsters and adventures).
I investigated the matter, actually talked to people who were at TSR when the Deities & Demigods stuff happened (including James “Drawmij” Ward, VP of Creative Services, TSR), and repeated online what actually happened often enough until the answer mostly stuck. Eventually, Joel “Aardy DeVarque” Hahn added this info to the FAQ for the rec.games.frp.dnd newsgroup*. Here’s the relevant info:
The first printing of Deities & Demigods included the mythoi of Cthulhu and Melnibone. The ideas behind the Cthulhu mythos were in the public domain at that time, but copyright on the Cthulhu books in print was owned by Arkham House, who had licensed Chaosium to create a Cthulhu RPG based on those books. TSR thought the public domain status allowed them to create game representations of whatever Cthulhu creatures they desired, and so that mythos was added to Deities & Demigods. TSR then contacted Michael Moorcock [author of the Elric of Melniboné stories], who gave permission for TSR to include the Melnibonean mythos in Deities & Demigods. However, again, Chaosium had already arranged for a license to create an Elric RPG. Chaosium became upset that TSR was apparently violating Chaosium’s licenses, and the print run of Deities & Demigods was halted while the two companies sat down to talk. Eventually, they agreed that TSR could continue printing the books with the two mythoi as is, on the condition that a note be added to the preface: “Special thanks are given to Chaosium, Inc. for permission to use the material found in the Cthulhu Mythos and the Melnibonean Mythos.” The printing plates were changed, and the first printing continued.
When the time for a second printing came, the Blume brothers [majority shareholders of TSR at the time] decided that a TSR book should not contain such a prominent reference to one of their competitors. They decided to remove the two mythoi, and thus the need for the note. (Apparently, Gary Gygax offered to write up two new mythoi to fill the space, but the Blumes decided they could make more money charging the same price for a book with fewer pages.) Later, the book–still without the two mythoi and the note–was republished under the name “Legends & Lore.”
When Legends & Lore was updated to 2nd ed. AD&D, several more mythoi were removed, namely the Babylonian, Finnish, Nonhuman, and Sumerian mythoi; the Central American mythos was renamed the Aztec mythos. Contrary to rumor, the Newhon mythos was never removed, and, in fact, was included in the 2nd ed. L&L, probably due to the simple fact that it is TSR who owns the license to produce Lankhmar materials. The deities of the nonhumans were reintroduced in Monster Mythology.
So, there you go.
BTW, you should read the rec.games.frp.dnd FAQ, there’s a lot of neat info saved in there that you can’t find elsewhere. (Of course, with the decline of newsgroups, the FAQ is out of date, and was last updated in 1999.)