The on-loan Brighton and Hive Albion midfielder was a key member of the Millers team that won promotion to the Championship last season.
As soon as Rotherham beat Shrewsbury Town in the League One play-off final, Towell was one of the key transfer targets for Warne.
But unlike goalkeeper Marek Rodak – who has returned for a second stint in South Yorkshire – talks to bring Towell back have dragged on throughout the summer. With the new season kicking off tomorrow, when Rotherham will travel to Brentford, manager Warne has been frustrated in his recruitment plans.
“I believe we spoke to Brighton (on Wednesday),” said Warne. “There have been ongoing talks with his agent.
“If we can’t make it work for both parties, as with every signing, it won’t happen.
“I don’t believe we are much closer than we were a month ago. That doesn’t mean I have given up hope that it could happen, but it doesn’t seem any more likely.”
Irishman Towell, 27, who made 39 appearances for the Millers last season – netting five goals – has also been linked with a move to Portsmouth.
The transfer window for permanent deals closes next Thursday, but clubs can still make loan signings until the end of the month.
Warne added: “If someone comes in and buys him it’s game over.
“If it goes beyond the window, an opportunity for a loan, then we still have a chance to get him.
“But at the moment it feels like a bit of a stalemate to me.”
As well as Rodak, the Millers have also recruited Zak Vyner, Clark Robertson, Kyle Vassell, Billy Jones and Sean Raggett this summer.