Main Canon
The quote from the episode script was
PICARD: A "save our skins" maneuver. The Stargazer was on fire, finished. We had to abandon ship, and limp through space in
shuttlecraft for weeks before being picked up. (beat) I haven't
thought about it in years...
But yes, you're right. Once the onboard fires were extinguished, the ship seems to have been in pretty workable condition. As to why it wasn't salvaged (by the Federation), the Ferengi presumably managed to get a team there faster to tow it away. The assumption was that it had exploded/crashed.
EU Canon
The Star Trek EU novel "The Buried Age" discusses the Battle of Maxia (and Picard's subsequent court martial for the loss of his vessel) in great detail.
The ship was mortally wounded, on fire and possibly leaking radiation. Picard left it in a decaying orbit around a local gas giant, in the expectation that it would burn up in the atmosphere.
Simenon made an unhappy noise in his throat. “As I feared, Captain.
The purge is incomplete. Some of the hatches didn’t respond-we still
have fires burning in much of the engineering section and physics
labs.”
A thought struck Picard. “Can you shut down ship’s gravity? Without
convection, the fires would smother in their own smoke.”
The Gnalish shook his gray-scaled head. “I no longer have control of
those systems.” It was the paradox of Starfleet gravity generators:
under power, their superconducting stators could be braked within
moments, allowing near-instant gravity shutdown, but in the event of
power loss the stators would continue spinning on sheer momentum for
up to four hours. It was a safeguard against power loss, but right now
it was working against the ship’s survival.
“Oh, no,” Simenon said. “I’ve read an explosion in nuclear physics.
Atmosphere venting from those compartments…I’m detecting radiation
spreading outward. Looks like…a canister of plutonium must have
ruptured. No fission, but the plutonium dust is spreading through half
the ship.” He shook his head. “We don’t have the equipment to
decontaminate it.”
Picard stared at his dying ship. “Then we can never go back.”
After the crew had absorbed that for a time, Ben Zoma asked, “What if
there are more enemy ships coming? Ships that do have decon equipment?
Do we just leave her for them?”
“We never made a stable orbit,” Asmund answered. “She’ll spiral down
into the Jovian’s atmosphere within a week, two at most.”
“Can we make sure she self-destructs?” Picard asked Simenon.
“The engine controls are unresponsive. And these shuttles don’t have
the armaments to take her out. The only way would be to remove one of
the shuttles’ micro-warp cores and make it into a bomb.”
and
Afterwards, Phillipa changed her tack, concentrating on the third
charge, Picard’s alleged failure to ensure that the ship was scuttled.
She called Simenon to the stand, and the engineer testified to
everything Picard had attempted, first to save his ship, then to
ensure its destruction once abandonment became inevitable. He
explained why they could not have risked returning to the ship or
sparing a shuttle warp core to destroy it, and stated that its descent
into the Jovian’s atmosphere was certain in any case. “And long-range
scans saw no sign of hostile ships in the time it would’ve taken the
Stargazer’s orbit to decay.”
