Boyd arrived at Forest on Thursday morning but the transfer collapsed at the 11th hour over what Peterborough described as an "inconclusive eye test".
The two clubs had agreed a fee and personal terms had been agreed with Boyd, who had a loan spell with the Reds towards the end of the 2009/10 season.
It is understood that Forest boss Alex McLeish still wanted to press ahead with a permanent transfer but the club's owners, the Al-Hasawi family, were willing only to sanction a loan deal.
Peterborough's director of football Barry Fry exonerated McLeish for what happened and laid the blame firmly at the door of the Al-Hasawi family.
He said: "Alex has been a gentleman over this, it was the owners who pulled out and they are a disgrace to the game. I don't know how they can call themselves fit and proper.
"I can't understand why they called it off 12 hours after his medical and after Alex spent three weeks trying to get the player.
"We've never had any problems with George and he's in bits. Alex still wanted to do the deal but the owners said no. Alex has been having rows with them for a couple of days about transfer targets. I wouldn't be surprised if he walked over this."
Rumours did circulate on Thursday night that McLeish was so furious with the lack of transfer activity at the City Ground that he had resigned.
However, McLeish has denied falling out with Forest chairman Fawaz Al-Hasawi.