Arrow's Harley Quinn tease was dropped because DC had plans for the character as part of the DCEU. Arrow has easily been the most successful and important series in the history of DC TV, successfully launching an entire shared universe of superhero TV shows. One of the key reasons for its success, though, was the smart decision to make Green Arrow a lot more like Batman than he usually is. The writers and showrunners even plundered Batman's superb rogues' gallery, with Stephen Amell's Oliver Queen facing the likes of Deadshot, Ra's al Ghul, and Firefly.
In 2014, Arrow season 2 teased the introduction of Harley Quinn. Amanda Waller and her deputy, Lyla Michaels, assigned John Diggle to lead Task Force X, aka the Suicide Squad, a group of criminals operating with plausible deniability. Diggle was less than delighted to work with brutal murderers, including Deadshot, who he believed had killed his brother. John and Lyla moved to one side to argue, and unwittingly stood outside the cell of a character who was clearly supposed to be Harley Quinn. "Do you cuties need some counseling," Harley called out after listening in for a while. "I'm a trained therapist!" A subsequent deleted scene showed a glimpse of a prisoner in pigtails, but the Arrowverse's Harley Quinn was too deranged for even Amanda Waller to consider her for Suicide Squad.
Unfortunately these hints were never developed. Speaking at SDCC 2014, producer Andrew Kreisberg admitted they'd had something of a battle on their hands just to give viewers those brief nods to Harley Quinn. "There are very few things we've asked DC Comics for that we haven't gotten," he observed. "That was something you asked for, and what you saw is a compromise that Geoff Johns and I came up with. To even get that much was a thrill for us." The core problem was that DC feared they would damage the Harley Quinn brand through overexposure, and at the time they were focused on the DCEU's version of Harley, who would be played by Margot Robbie in Suicide Squad.
The writers and showrunners may have tried to put a positive spin on it, but Arrow actress Willa Holland - who plays Thea Queen on the show - was a lot more open. Speaking at the MCM London Comic Convention in 2015, Holland claimed Arrow writers had big plans for Harley Quinn and the Suicide Squad. According to Holland, Arrow was going to develop its own version of Arkham Asylum, but that, too, was dropped. "We were going really heavily into that for a minute," she noted. "And then, something must have come down from DC or some higher-up above that said 'No, you must cease and desist because we’re going to make it into a movie and we can’t have anyone spoil that idea.'"
DC essentially withdrew the license for Suicide Squad altogether, and soon attentive viewers began realizing characters associated with the brand were being killed off. Deadshot's death in Arrow season 3 didn't look too suspicious at first glance, given his story looked fairly complete, but Marc Guggenheim openly admitted on Tumblr that he had been taken "off the table." Amanda Waller, too, met with an untimely demise in a far less satisfying scene, shot by a random terrorist in Arrow season 4. Suicide Squad, Arkham Asylum, and Harley Quinn were all clearly gone from the Arrowverse - and when Arrow finally did revisit the concept in season 7, they carefully avoided calling it either "Suicide Squad" or "Task Force X."