Following are my opinions on the subject.
Songs can be classified (very crudely) as to falling into one of four structures: strophic (verse only), verse/chorus, verse/verse/bridge/verse and unstructured. The latter 'structure' is fairly rare in modern music as both musicians and listeners prefer repeating structures. Almost all of the songs that Sandy Denny wrote have strophic structure, for example "Who knows where the time goes", "Late November" and "Full moon". There are a few with bridges, for example "Autopsy" and "The north star grassman", but these are very much the exceptions. Off hand, I can't think of one SD song with a chorus; I would consider "One more chance" to be classified as having a bridge.
The problem with arranging and producing Sandy's songs is not that they are slow and sad, but rather that they are strophic. This wasn't too much of a problem in the early days, especially when Sandy was accompanied by Richard Thompson, but it was the major problem in the later days.
How would a producer solve the problem of making a strophic song consistently interesting to the listener? By changing the arrangement. The 'mother of all strophic songs' might be considered to be 'Matty Groves'; despite the seventeen sung verses, the arrangement changes throughout the song, and there are even a few instrumental interludes which both heighten the drama and maintain the listener's interest.
An external example of solving the 'strophic problem' would be some of the songs on Leonard Cohen's first album; John Simon (later to work with The Band) surrounded the bard with accompaniments which changed almost on a per-verse basis (it should be said that I don't consider some of Simon's choices to be good, but at least he made choices).
In what might be considered to be her 'prog' album, "The north star grassman and the ravens", each song has a different line up of musicians and instruments. Although "Late November", the opening track and a remnant of Fotheringay 2, is strophic (five sung verses as well as one instrumental), there are a few breaks and the arrangement alternately brings forward the lead guitar and the piano (especially at the beginning). "Next time around" is also strophic but has a very good string arrangement by Harry Robinson which varies from verse to verse.
The eponymous "Sandy" album was the first to be produced by Trevor Lucas and the cracks are beginning to show. Interest is maintained in "It suits me well" by changing the sounds used (I still have yet to identify exactly which instruments are used) or else by Richard and his inventive licks. "For nobody to hear", an odd one out, is saved (or not, your mileage may vary) by the horn arrangement by Alain Toussaint; I always imagine this as an attempt to copy The Band (Toussaint did the arrangements for their "Rock of Ages" live album which would have been released just before the sessions for "Sandy").
"Like an old fashioned waltz" is composed almost entirely of strophic songs, blanket strings arranged as dully as possible by Robinson and a lack of other instrumental leads. One song is partially saved by a modulation (up three semitones from D to F, then back again; a trick which Sandy was to recycle), but otherwise dull, dull, dull. Producer: Trevor Lucas.
"Rising for the moon" provides a glimmer of hope; this was produced by Glyn Johns and it shows. The combined instrumental force of Sandy, Jerry and Swarb was put to extremely good use on "One more chance" (but remember that this song is not strophic). "After halloween" might be strophic but it has a very careful violin solo in the middle. Listen also how there are acoustic guitar strums from alternate sides of the stereo. On the other hand, the title track is yet another strophic outing from Sandy whose attraction wears off fairly quickly.
"Rendezvous" does show a few interesting attempts at making something new: "Gold dust" and "All our days" are hardly standard fare for Sandy. But as for the others.... The classic mis-produced song for me is "Full moon": excellent lyrics but strophic structure (four verses and one instrumental). The strings are generic and even Sandy's piano is formulaic. A good producer would have noticed how soporific this track is and would have done something to improve it. Even holding the strings off for the first verse would have made a difference.
There may well have been mitigating reasons why the records turned out the way that they did; after having read the Houghton biography, the first word that comes to mind is 'budget'. The second reason is that they (Sandy and Trevor) might well have thought that the production was sympathetic and cast Sandy in the best light possible. They came from a musical background in which 'production' and 'arrangement' were anathema. John Wood was a well known 'string freak' and Trevor may not have been able to stand up to the combined forces of Wood and Robinson. One also has to take into account that Richard Thompson was missing in action during the mid-70s.