But David Peters had made a few trips to Germany since then...

Heath, in all seriousness, South Australia basically consists of Adelaide... and that's about it.  That's the fundamental problem, there's no large regional cities close by to Adelaide; the only possible candidate would be Victor Harbour and the old rail alignment isn't suitable for modern operations, the same goes for Port Pirie. Kapunda and the Barossa are also possible candidates but the population base isn't there. Mt Gambier and Whyalla are just too far away and the competing air service is much better than anything rail could offer.

You also need to consider that people in those towns don't care enough to want to bring a rail service back.