I don't quite understand what exactly is meant by sad to relate as it's used in the following picture:
The phrase sad to relate is being used as a parenthetical phrase meaning sadly. It is easy to understand why this phrase is difficult. The head word here is the adjective sad. Because of this, the phrase looks like an Adjunct which might describe the Subject of the main clause:
- Sad to relate the news, Bob told them that they had not passed the exam.
In the sentence above sad to relate the news describes Bob, the Subject of the main clause.
However, this cannot make sense in the Original Poster's example:
- Sad to relate, this was a case of XYZ.
Here the word this means the previous example. The example cannot be sad, and it isn't relating anything to anyone. The sentence means something like:
- Sadly, this was a case of XYZ.