In an interview with Premiere.com, Madsen says "They haven’t shot it yet. I don’t know if they ever will. I am not sure [about] the franchise. I think the Grindhouse thing didn’t kind of work out…"
What "Grindhouse" has to do with the financial prospects of "Sin City 2," I have no idea. The first "Sin City" certainly made its money back and then some, so I’m betting it’ll still happen. Just probably not real soon is all.
And when asked about his relationship with "SC" creator Frank Miller, Mr. Madsen says "I talk to Frank Miller quite often. He came up to my house and we drank a lot of tequila. Frank is pretty funny. I haven’t seen the script for Sin City 2. I don’t know if they are gonna make it. I hope they do. And if and when they do, I will be in it."
For a whole bunch more, check out the full interview at Premiere.com.