I've had the same question and all I found out is that red isn't as popular as some will think so they made him more of a side character in both direge of cerberus and advent children. Alot of fans were dissapointed in this (me included).
Dirge of Cerberus Why doesn't Red XIII talk?
- Thread starter Strife
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Actually, it's because of how immensely difficult it was to animate his fur. I was extremely pissed off at his lack of inclusion in both the movie and the game, but it's what they decided for it. Doesn't mean we can't change their decisions for the next games, though 
Omnislasher483
Posterboy for FFVII
If I remember correctly, he didn't have any lines in DoC. He appeared for a few seconds and that was it. I would've liked to see him involved in the attack on Deepground in the Midgar raid, he's always been one of my favorite FF characters, it's too bad he's so underrated and unappreciated. If I'm not mistaken, he also only had one line in AC.
Final Bullet
Favorite esper = famfrit
Red XIII Never talked much in FF7 anyway, maybe its just his personality?
FF7Guru
pro gamer dude. no messin'.
Red is a great character that is extremely popular, and loved, whether you look at him as a cuddly dog, or a killer. We should petition SE to say how much we all love him. Besides, Red XIII had a line that everyone expected in AC. Someone else could have said it, but they had to maintain the talking part of him, or else he would be a red dog, not a character. He should talk more.
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Red XIII did talk in the original game when he needed too. Sure he wasn't always talking, but he spoke more than Vincent did (yes I know you'll say that is because Vincent is optional, but even so, Red XIII would talk more anyway). And he always had great things to say.
He deserved more than one line in AC.
He also deserved a bigger role in DOC, but sadly it was not to be...
Hopefully, instead of concentrating on a remake they will give us a Red XIII game? That will be a harder game to mess up, as you can't emo-ise Red XIII because he is, to put it simply, too cool for that.
Or..... Perhaps they'll make him the playable hero for FF7 in Dissidia? I'd love that! But sadly... I think it's more likely to be Cloud or Zack... Anyway, off topic there.
Yes it is sad that Red XIII didn't talk alot in AC, and not at all in DOC, but it's because they wanted to minimise the time Nanaki was in the film and game because it would cost too much... And remember, these guys want to dish lots of stuff out as fast as possible and don't care for characters like Red XIII anymore!
He deserved more than one line in AC.
He also deserved a bigger role in DOC, but sadly it was not to be...
Hopefully, instead of concentrating on a remake they will give us a Red XIII game? That will be a harder game to mess up, as you can't emo-ise Red XIII because he is, to put it simply, too cool for that.
Or..... Perhaps they'll make him the playable hero for FF7 in Dissidia? I'd love that! But sadly... I think it's more likely to be Cloud or Zack... Anyway, off topic there.
Yes it is sad that Red XIII didn't talk alot in AC, and not at all in DOC, but it's because they wanted to minimise the time Nanaki was in the film and game because it would cost too much... And remember, these guys want to dish lots of stuff out as fast as possible and don't care for characters like Red XIII anymore!