United had put an indicial 1.5M bid in with an extra 500k should the Blades reach the Premiership, however Bluebirds chairman Sam Hamman has hit out at the approach and suggesting that 3.5M is more of a reasonable offer for a player who has yet to prove himself at a higher level.
Norwich City are now believed to be offering 4M for the former Middlesbrough trainee but Neil Warnock now looks more than certain to turn his attentions elsewhere.
McLeod who looked set to join Wolverhampton Wanderers has seen his two deals fall through after Glenn Hoddle has decided to give up and turn his attentions to Tomaz Frankowski.
MK Dons have issued a statement saying that they are willing to accept an offer of 600k rising to a total of 1.3M after clauses, it is believed Blades boss Neil Warnock will table a bid of around that figure.
The former Derby striker McLeod played just one game for the Blades (+ 6 as sub) whilst on loan during the 2003-04 season.
Meanwhile, speculation continues involving highly rated forward Geoff Horsfield. Blades-Mad reported on 4 January that the Blades are interested in the Barnsley born striker.
It is now believed, according to The League Paper that United are very close to completing the signing of Horsfield.