Is there a reason why there isn't a magic damage version of blade of the ruined king for champs that DPS with magic damage?

There is an item that does that

Liandra's Torment deals (5%health) or (10% if slowed) to enemy champs per spell you strike them with.

It builds out of haunting guise

I was thinking about something like this.

70 AP
10% life steal

Unique Passive: Your attacks deal 4% of targets current health in magic damage and heals you for half that amount.

Unique Active: Drains target champion dealing 150 magic damage plus 87% of your AP and healing you for same amount. Additionally you steal 30% of their movement speeds for 2 seconds. (60 second cool down)

That sounds like a combination of existing items: Mask, Will, Fidd's Drain, and Malphite's Shard. It sounds rather odd, and potentially broken.

If you're utilizing auto-attacks with an on-hit build in the first place what's so bad about the AD?

I have the distinct impression that Blade of the Ruined King was put in as a means of making an item NOT for "on-hit" builds like Madred's Bloodrazor wound up being so often; it wound up being too simply: just take a Wit's End and Madred's to get both major damage and tankiness to prevent counter-bursting, and then the Malady would ensure they softened up.

Remember that the BotRK (I guess "bork") is relatively UNIQUE in that its on-hit effect applies lifesteal; your lifesteal is not going to apply to magic on-hit damage.