From a writing perspective, they probably just didn't want to get rid of the character, which I can understand.
This, I get - but it becomes a little difficult to justify in-universe, since...
Military officers today potentially experience varying levels of torture, and most of the time can be helped through the trauma and return to duty (I think... I'm no military expert
...while this is mostly true, it doesn't compare to what happened to Picard in one important aspect. For all Starfleet knew, the Borg had a copy of the contents and structure of Picard's brain. Effectively, for all they knew, the Borg could have "run" a copy of Picard like a program, and known with a high degree of certainly what Picard was likely to do at any given moment.
Of course, to counter my own argument, Starfleet has a history of doing out-security BS like this - like returning Kirk to duty after he was switched with Janice Lester, or Chekov after his mind was compromised by Khan, or Spock after he had his brain out and connected to an alien computer. Or ANY of the TOS crew except Kirk and Spock after Sybok got them to go along with mutiny by playing in their heads. Of course, I guess in all those cases, a Vulcan mental expert could have certified them clear of influence. So here's another one: Letting Data stay in Starfleet (or powered on, for that matter) after he singlehandedly took over the ship due to programming he was unaware of, and has no idea whether or not there could be more of.
If space exploration in the Star Trek universe was Serious Business, Starfleet would be hosed.