But O'Neill has not allowed him to play in the FA Cup - including Tuesday's third-round replay at Birmingham - and feels he can still make an impact at Villa Park.
The former England defender began the season in Villa's starting XI but was instantly replaced by Warnock after his switch from Blackburn in August.
O'Neill said: "Selling Nicky is not something that I am looking to do at this minute and nothing concrete has developed.
"If there was an offer, I would sit down with Nicky and his agent to discuss it but I am not actively seeking (to sell him).
"Nicky thought when Stephen Warnock arrived that his chances would be limited at the time.
"But he is capable of fighting back. I think he is enjoying it immensely at Forest and he's playing which is what he wanted to do."
O'Neill has been keeping close tabs on how Shorey has been progressing at the City Ground and feels he can make an impression at Villa if he improves the defensive side of his game.
He said: "We've had people at every game he's played in and I've also got the matches on DVD.
"I think going forward he has done very well and if he tightens up his game defensively, he has loads to offer - and I think he has tried to do that."
Meanwhile, Villa are hoping to arrange a practice match at their Bodymoor Heath training ground to help Curtis Davies regain match fitness after his long lay-off following shoulder surgery.
Davies is now back in training after going under the knife in September but the weather has so far frustrated his attempts to play with last week's reserve match against Portsmouth postponed.
O'Neill said: "Curtis is training but obviously he needs to play now. His match fitness would be a problem."
Aston Villa 11/8, Blackburn 2/1, Draw 9/4