Modric has already answered a hundred times about moving to Al-Nasr, he says that he really hopes to stay in Real Madrid, but the contract has not yet been signed. Perhaps there is nothing wrong with this, if a player feels that he is in good shape and can continue to play at a high level, then why should he not continue to play for his team. In any case, if his performance deteriorates, Ancelotti can always replace him.
Yep. Modric isn't interested to move to Saudi League, he prefers to stay with Real Madrid if he still has the chance to stay there. However, Real Madrid may have some consideration to not extend his contract, it is related to his age. Real Madrid must prefer to put younger players in the main lineup, so Modric will be a substituted player only if he wants to stay. We know Real Madrid already have some top midfielders as the successor of Modric. This is probably the reason why Real Madrid still didn't extend his contract.
There is also the problem that with age the likelihood of injury increases, remember how many injuries Ibrahimovic had when he continued to play in recent years. But Modric always seemed to be doing well, I don’t remember him spending much time with any kind of injury.
You're right. When a player is almost 40 years old, they will be easier to get injury and no longer has a good fitness. That's why Modric never played full time anymore, he moslty just played in the second half of the match. Or he played in the first half of the match only, he will be changed with another player in second half. Modric will be more often to sit on the bench, it is also to give more time for younger players to play. And this is also the way to avoid severe injury.