It's funny, I remember a lot of the same things people are mentioning here, like Arnold being peeved about the manual, but I don't remember how I heard about all that. Conversations with the local game shop owners? In 1987-88 I wasn't online yet. Maybe I heard a lot of this after the fact. Anyway. Richard Arnold didn't shut FASA Trek down immediately. The end was near but not quite there. FASA had time to issue that First Year Sourcebook in 1989, a year after the Officer's Manual was published.
Quoting my old website about the First Year Sourcebook... "One of the last FASA
Trek publications, this is the Paramount-approved
Next Generation supplement. Unlike the
Star Trek: The Next Generation Officer's Manual, this is relatively short, game-oriented, and full of disclaimers (for example, on page 3, 'Some materials in this book were created expressly for
Star Trek: The Role Playing Game, and may be invalidated by later episodes of
Star Trek: The Next Generation.') There's less canon-violating material here, but there's less of almost everything; this is roughly half the length of the first
Next Generation role playing book."
Gosh, it was fun collecting that FASA stuff back in the day, though. I never played the game but I read most of the books, and I liked some of the creative things they did, like Spacelanes: The Magazine of Interstellar Trade, which came with the Trader Captains and Merchant Princes book, and the way they developed the Triangle area.