The thing was there was a money dispute, but he had had to fight for decent writing for the latter part of S4, and all of S5. The reason was that the Raimis were more into Lucy/Xena, and were diverting funds from Herc to Xena. So Sorbo was frustrated, kept fighting for the show, and had incessant fights with the Raimi bros for funding. By the time S5 ended he was so exhausted he decided to walk away.

Add to that, that Lucy had slept with someone up high in the food-chain, Sorbo was a Christian, and that he had had his ego bruised when he was denied cameos in Xena, and that the Raimis were salty about him doing the Kull movie and he had decided to walk away. Apparently Kevin Smith & the Morrigan actress were understanding of his frustration, while Hurst was later to participate in Sorbo’s cancellation and you get the idea production was a nightmare eventually.