Forgive me for sounding pragmatic(or is it pessimistic?), but barring some miracle/act of the gods, I think it's rather unrealistic to anticipate server activity reaching even 50% of the numbers it used to boast. Quite frankly, and has been previously stated, this game is really dated. From an external standpoint, there are immensely better games out there to play(and perhaps more appealing places to roleplay, considering the populations on other online games/servers). Would advertising the server help at this point? It certainly couldn't hurt I suppose.
From an internal standpoint: there are things that really aren't working in BG's favor, but some aren't necessarily anyones fault. For example: The size of the server in relation to the size of the playerbase. Now I'm not one to usually complain about getting a whack of fancy new maps, but I feel like the timing of the server split/expansion couldn't have been worse. As much as I enjoy seeing new areas, parts of the server are absolutely daunting when it comes to simply going from point A to B. If I were a new player starting in BG city, I wouldn't last very long. Again, this isn't to cast blame, or complain, but when you have a player base of 30 to
maybe 40 during peak hours, and half of those are huddled around the same 5 or 6 areas, then I'm afraid it's going to make for a very lonely and remote experience for the average player, new or old. Would putting a hold on, or even scaling back, the size of the server help at this point? I truly have no idea.
Now, I don't log on enough to have a real grasp on DM activity, but from my limited play time and observations, I see more happening on the forums than in game (and I can't say I blame anyone for that either, heck, I hardly want to log on, and seldom ever feel the urge to do anything but explore and loot.
RP? eww). But I will say this, and I've said it dozens of times before:
the best times I ever had on this server were from one off DM events, small plotlines, or guild outings. Huge over-arcing plots were alright... but mostly became draining in terms of forum responsibilities and playing the waiting game for the next installment. For soooo many years guilds were a huge aspect of the lifeblood of this server. Keeping guilds alive and active requires a HUGE investment of individual/group energy, so this one isn't an easy fix. At least not until BG regains some semblance of heightened player activity.
As for player retention, I don't really see an issue here. The same 30+ regular players that have been playing on BG for the last year don't seem to be going anywhere, and they seem capable enough at creating their own RP(on whichever of their numerous characters they choose to play on

). The regulars that are left seem quite accommodating as far as I can tell, and they seem to do the best with what they're given. To those players I say: kudos. Enjoy it for as long as it lasts, and keep giving attention to whichever wayward souls that happen to find their way here.
End rant.