I can tell you from my own experience, having had a nearly-complete game cancelled on me once during my career.
Game source material tends to be highly game-specific, and even more so for MMOs. It's saved forever in archives, of course, in case someone wants to pilfer something, but as technology marches on and tools are updated, it becomes harder to keep the game in a working state - especially for MMOs, who have extremely complex building and deployment requirements.
In terms of game code (not engine code, which is designed to be reusable, of course), there are two basic approaches to starting a new game. If you're working on a sequel or have a similar game in the company library, you can branch an existing game and start stripping it down - this let's you start with a working game, and then you can swap out systems on the fly with whatever needs to change. If the game is distinct enough and wouldn't benefit from this techinque, you can start clean, working on top of whatever shared engine and libraries you have, but still may copy over specific subsystems, or use them as a starting point for new systems. This obviously occurs if it's your first game, but also if it's the first game within a new genre that wouldn't benefit from the copy-and-modify approach. For instance, when I worked on a turn-based strategy game and most of the company's previous games were 3rd person adventure games, it would have been pointless to start from one of those games' source code.
For artwork, it really depends. Sounds, textures, and music are easily reused in many cases. Models and animations are a bit more of a question mark. Animations typically are matched to a specific rig and a specific set of game code that utilizes them. More often than not, all the game art tends to be too game-specific to be re-used for anything but a direct sequel, and often by then the assets aren't appropriate for the current state-of-the-art technology.
So, in short, it's archived away somewhere and most likely, only parts of the source code will be reused as a launching point for a new product. Most of the art assets will probably never be reused, unless they're fairly generic environmental textures, sound effects, or music that happen to match a new product's genre and style.