Short answers, pulled from the story.
NASA began studies of Space Shuttle designs as early as October 1968. These initial Phase A studies focused on supporting a future space station and ferrying a minimum crew of four with about 50,000 pounds of cargo.
North American Rockwell won the contract to build the Space Shuttle orbiter. NASA announced its choice of North American on the 26th of July 1972 after evaluating proposals from Lockheed Aircraft, McDonnell Douglas, Grumman, and North American Rockwell.
The fully reusable design was abandoned due to high price, technical complexity, and development risk. Further studies showed that a huge booster was needed to lift an orbiter with the desired payload capability, which meant the overall vehicle cost would be very high.
The Defense Department gained primary control over the design process because NASA needed outside support. The military insisted on retaining a 50-foot wide payload bay and required higher energies for polar orbit launches from Vandenberg AFB.
Work on SLC-6 was eventually discontinued following the loss of Space Shuttle Challenger on the 28th of January 1986. No shuttle launches from that location ever took place before it was reconfigured to handle Boeing Delta IV rockets.