Someone (I believe it was Paul Magrs, but I'm not entirely sure) once said that the TARDIS isn't a machine for traveling in time and space, it's a machine for traveling between genres. This is certainly in evidence in the new series, with the Doctor wandering through Westerns and horror stories and all manner of big-budget Hollywood blockbusters, but it's been a part of the series almost since the beginning. Sometimes the story is a comedy, sometimes a tragedy, sometimes out and out horror, and yet somehow the Doctor seems naturally to fit into all of them. It's one of the things that has made the series so refreshingly renewable over the years; the Doctor has been able to essentially borrow from whatever's modern to make himself seem relevant.
And yet, when you look at the few attempts to blend in with fantasy, they've almost always been dreadful failures. 'Cat's Cradle: Witch Mark', 'Autumn Mist'...really, about the best of them was 'The Sorcerer's Apprentice', and that keyed on the idea that there was no such thing. Even Paul Cornell's take on "The Doctor does a trip into a fantasy universe" was his weakest novel, and he's sodding brilliant. Why is it that the Doctor can't go into a high fantasy novel the same way he can wander into a Western or a crime caper?
The most obvious answer, of course, is that Doctor Who doesn't do fantasy. It's firmly set in a rational universe with an orderly set of scientific rules, even if they are handwavy "psychic paper" and "sonic screwdriver" and "anti-plastic" type rules. People will point out that a sonic screwdriver is basically just a magic wand with a different name, but that misses the point. It's the name that's actually important. Doctor Who states that everything is explicable, even if we aren't smart enough or experienced enough or knowledgable enough to understand the explanation yet. That's a pretty key difference from a world where High Prophecy and gods simply tell you that this is the way things are.
That means that whenever the Doctor enters a fantasy universe, one of two things has to happen. Either first, he has to come up with a scientific explanation for it all. These are usually leaden and dull, and tend to reduce the whole thing to an exercise in mapping handwavy science fiction explanations onto handwavy fantasy explanations. There's nothing intrinsically exciting about a horse with a horn on it, even if it's a horn with extra brain in it that gives the horse telepathy. Fantasy is all about the poetic and the symbolic, not the literal; things are not necessarily meant to have an explanation.
The alternative is that the Doctor surrenders his narrative primacy, acknowledging that yes, this is magic and cannot be understood, even by a Time Lord. This is in some ways the far worse alternative, because the thing that's special about the Doctor when he travels to another genre is the way he warps it about himself. The Doctor is fun to read about in a Western because he doesn't carry a gun and he wanders off to talk to the Native Americans and comes back as an honorary member of the tribe. The Doctor is fun to read about in a crime caper because he wanders into the head office of the local mob boss and says, "Hello, can I have a spot of tea with you while we chat about the murders you've committed?" The Doctor is, in a good story, the center of the narrative. That doesn't happen when he goes into a fantasy story. Instead, he has to follow the rules of that world. The Doctor is never fun when he's following the rules.
I won't say that it's impossible to do a Doctor Who story that involves fantasy elements--'Battlefield' pulls it off by suggesting that a future Doctor will be the one to square the circle and deal with magic on its home ground--but for the reasons above, I think it's far riskier to try and there's less payoff. My advice to future Doctor Who authors would probably be, "If you want to write a high fantasy novel...go have fun. There's plenty of publishers out there who take 'em."