Here's my guess as to why they're still trying to roll the Time reporter if they've already got Novak. They want to convict someone in the administration for leaking the name of an agent. Suppose Novak gives the guy up--the case is then a straight he said/she said. Which may be good enough, but no prosecutor would want to go in court on that alone, if you can have an absolutely iron-clad case with two different witnesses fingering the same person.
I also think there's an argument here that, long-term, you don't want to let one journalist off the hook if another one cooperates--that creates undesirable incentives (namely that if you cooperate, you end up ruining your reputation, but if you don't cooperate, you get to take the chance that someone else will and you get to get on with your life like nothing happened). I think this is actually a significant issue--if you want to create a precedent that journalists have to cooperate, you have to convince them that everyone will be forced to cooperate, not just the first person to cave. There's a more elaborate game theory thing going on here, but it's beyond my mathematical abilities to play out. This may be too functionalist a theory, though--it doesn't usually work that just because the justice system as a whole has an interest, any particular prosecutor will try to act up on that generic interest. But it may work out this way, with the mechanism being prosecutorial anger at the non-cooperator.