If he wants anything like the 2.55 AAV he was making on his last contract, nope. But at 1x800K? 1x1? Hell, even at 2x1.25? Even in his current del-zasterous state he's probably still better than Matt Irwin, who I consider to be a dead-end stopgap at best.
It helps that MDZ has demonstrated his ceiling at the NHL level, and even though that was a few years ago and he might never hit it again, I still think that makes him worth a flier. Let Robinson take a run at fixing him up on a prove-it contract. If he improves himself like Demers did, fantastic. If he continues to be an unproductive pain in the rear, then so be it - we didn't give up anything but money for him. Sheppard 2.0, minus the 3rd rounder as a price and with a much higher upside attached.
At this point, it's pretty clear that there is little interest in MDZ from the league, so his price is probably around $800k.
Just sign MDZ and Ryan Whitney (or Colaiacovo) to 1 yr, $500-800k deals (maybe even 2 way deals on both, if you are permitted to do that) and see if one or two stick. It's low risk to bring these guys in and see if Larry Robinson can do anything with them. Also gives Irwin competition, which might make him better. If you can get them (MDZ and Whitney) on 2 way deals, you can bury their contracts if you need/want to.
Edit: There's a lot of Dmen out there too (guys I mentioned above, Volchenkov, A. Benoit, Komisarek, etc.). At this point in UFA period, they're going to be bargains. Just sign the 2 that Larry Robinson wants to bring in (provided they want to play here) and let's go make a run of it. Maybe even better than MDZ/Whitney/Carlo, you bring in Volchenkov and Komi:
Vlasic-Demers
Volchenkov-Burns
Braun-Komisarek
Irwin, Mueller
Each pairing pairs a defensive dman with offensive dman. Braun has to move to left side, but that's a small price to pay for a lineup with 3 offensive dmen and 3 defensive dmen. Can also make good PK pairings from this top 6. Could at times, and as situations call for, roll with Vlasic-Komisarek for a shutdown pairing. Am I crazy to think this 1-6 could be better than the Sharks 1-6 last season for Dmen? (i.e., Burns > Boyle, Volchenkov > Stuart, Komi > Hannan/Irwin?).