Nielsen said there was probable cause to arrest but not enough evidence to win a case. Without a body, Nielsen said, Powell could have escaped conviction at trial or pleaded to a lesser charge.
"If we could have arrested him we would have," Nielsen said. "... We had a pretty good circumstantial case."
Nielsen answered reporters' questions regarding the Susan Powell case while attending Monday's NAACP forum on Trayvon Martin, the Florida teen who was gunned down by a neighborhood watch captain in February, at the Utah State Bar Law and Justice Center in Salt Lake City.
Washington law enforcement officials received the information about West Valley City's case while investigating a voyeurism case against Josh Powell's father, Steve Powell.
In light of the new information, many people have wondered why West Valley City police did not arrest Josh Powell, who went on to kill himself and his two sons in February.
Pierce County prosecutor Mark Lindquist said last week that he would have charged Josh Powell with murder based on the evidence at hand.
"Washington doesn't know all the stuff we have," Nielsen said.
Josh Powell was the only person of interest for West Valley City police in the department's investigation of Susan Powell's disappearance.
Susan Powell vanished from her West Valley City home on Dec. 7, 2009. Josh Powell claimed he took his sons that day on a midnight camping trip to Utah's west desert and had no idea what happened to his wife.
Josh Powell refused to cooperate with police and moved with his two sons into Steve Powell's Puyallup, Wash., home in January 2010.
On Feb. 5, Josh Powell fatally attacked his sons, Charlie, 7, and Braden, 5, with a hatchet and then used gasoline to set his house on fire, killing himself.
"I don't think so," Nielsen said when asked if anything could have been done to stop the children's death. "I think Josh had it planned out. He was a bright kid. ... I think he made that choice.
"Nobody could have predicted what Josh did."
Nielsen said his department holds monthly briefings on the case with the Salt Lake County District Attorney's Office. During those meetings, the consensus decision was that more evidence was needed to arrest Powell, he said.
Salt Lake County District Attorney Sim Gill and his predecessor, Lohra Miller, both confirmed last week that West Valley City police never presented prosecutors a case to be screened. Screenings are required to file charges, Miller explained, so the district attorney and other prosecutors in the office can confirm the work of the prosecutor assigned to the case and ensure there is enough evidence to obtain a conviction.
Miller said the prosecutor assigned to the Powell case kept her apprised. She said she knew of the evidence in the case, but never believed it was enough to charge Josh Powell with a crime as it "would not rise to a level of reasonable doubt to convict a person."
Meanwhile, the investigation into Powell's disappearance continues, Nielsen said.
The questions that remain are, "What happened to Susan? Where is she? Who else was involved and who refuses to help us?" he said.
Nielsen suspected Steve Powell and "a few others too probably," have information about the crime.
Steve Powell, 61, is charged with 14 counts of voyeurism and one count of possessing an image of minors engaged in sexually explicit conduct.
The Pierce County Sheriff's Office obtained the warrant in an effort to retrieve the childhood journals of Susan Powell as investigators looked for more insight into the woman's relationship with her husband. During an Aug. 25 search, investigators seized materials that built their case against Steve Powell.
The search warrants released last week reveal new information about the disappearance of Susan Powell and the behavior of her husband afterward. They also give further details of Steve Powell's obsession with his daughter-in-law, including a folder with pictures of nude women that he had pasted the head of his daughter-in-law onto and footage he filmed by sneaking a camera under Susan Powell's dress while she was sitting at a table.
The documents detail early police interviews in Susan Powell's disappearance, including the initial one given by Josh Powell's sister, Jennifer Graves. Graves contacted her brother by phone and told him that his wife was missing and that he needed to return home. Josh Powell then asked Graves "how much she knew," the search warrant states. Graves questioned why her brother would ask her that, and then Josh Powell hung up, the warrant states
Friends of Susan and Josh Powell immediately told police of the couple's marital problems. One friend told police that Josh Powell made comments about how to dispose a body in a mine shaft and not get caught, the warrants state.
Police uncovered a safe deposit box that Susan Powell had opened that included a will and a letter dated June 28, 2008, stating that if anything happened to her, people should contact Jennifer Graves. Susan Powell wrote that if she died "it may not be an accident, even if it looks like one," the warrants state.
Police also discovered Josh Powell was the beneficiary of several life insurance policies taken out for his wife totaling $1.5 million, the warrants state.
Charlie Powell, then 4, interviewed police on Dec. 8, 2009, the documents state. He told police that his mommy went camping with the family, but "didn't come back home with them," the warrants state.