Deciding when to move on from a story (or book or poem or play or whatever) is a challenging choice that bedevils many writers. On the one hand, there are those romantic notions of “never give up on your work!” but on the other hand, there is no doubt that as an author you must write new and hopefully better stories. If you spend your entire time fiddling with some old piece, then you’ll never create new work.
A few weeks ago, J.A. Konrath had an interesting post on how to move on from a oft-rejected piece. The advice ranges from allowing a small amount of depression followed by tangible, real world ways to get back in the game.