No active-trail for Panels Nodes with "Node Trail"

Hard to say. Maybe node trail works on a system that assumes the original rendering and the node template panel override does something else. I'm not familiar with that module at all.

I realize this is forever old, but came across a site that was using a panels override and this module with a node that had a nodetrail set... it also didn't show the menu specified, until I did the following:

diff --git a/sites/all/modules/contrib/nodetrail/nodetrail.module b/sites/all/modules/contrib/nodetrail/nodetrail.module
index cbc8663..8442a79 100644
--- a/sites/all/modules/contrib/nodetrail/nodetrail.module
+++ b/sites/all/modules/contrib/nodetrail/nodetrail.module
@@ -68,7 +68,7 @@ function nodetrail_nodeapi(&$node, $op, $a3 = NULL, $a4 = NULL) {
       }
       break;
     case 'view':
-      if ($a4 == TRUE) {
+      if ($a4 == TRUE || TRUE) {
         if ($node->nodetrail_parent) {
           $href = db_result(db_query("SELECT link_path FROM {menu_links} WHERE mlid = %d", $node->nodetrail_parent));
           $item = menu_get_item();

Which fixes the problem, but I'm unfamiliar with the $a4 param and more so why we would care to check it in this case.

That parameter is documented here: http://api.drupal.org/api/drupal/developer%21hooks%21core.php/function/h...

If I remember right, there is a checkbox to control that flag when you have the Node: Content pane. That does indicate that node trail very specifically needs the node to be viewed with that flag set, and that will only be set if your node content pane is configured to do that.