A major staple of the early days of the Satanic panic was a book called Michelle Remembers, a complete fabrication presented as fact that somehow became a best seller. (worth noting that most of the "events" in that book took place within a mile of where I'm sitting right now). That book had legs, and was still being cited in courts as "evidence" of occult crimes well into the 1990s. Most if not all of it has since either been disproven or recanted.
Another factor in the mid-late 1980s was the early and broad-based stirrings of what in the 1990s became a fairly significant neo-Pagan movement. The churches saw this coming, stuck it all under the Satanist banner, and blamed - among other things - D&D. In the Chick tract, for example, Black Leaf's DM is wearing a pentagram.
And yet another factor that didn't help sales from about 1984 on was that the high-school and college-age types that had fueled the fad until 1983 were aging out and getting jobs and responsibilities, and thus had less time for gaming. TSR didn't catch on to this fast enough, and lost the chance to keep the train rolling.
