Pennington, who went by "Peanut," asked Murray if he wanted to see what was inside, Murray testified. His facial expression communicated, "I have this secret; do you want to know what it is?" Murray said.
Murray said he didn't want to know.
"I got this bad feeling, this weird feeling," he testified. "... I believed it was a human body."
The men carried the package away from the car, returned empty-handed and went with Murray back to the party, Murray said.
There, Pennington said that Ramirez known as "Smurf" was dead, recalled Terry Cary, who was hosting the party.
"And we was flipping out," Cary said. "We couldn't believe she was dead."
Murray said he then believed he knew what happened to her.
"Putting one and one together, after I heard what I heard, I just had this feeling inside me that that had to be Smurf that was in my trunk," Murray said.
Cary said he remains unconvinced.
"[Pennington] didn't act nervous. He didn't act fidgety," Cary said. "I believe if he had known something he would have come and told me. I still believe that to this day. ... I don't believe that man killed nobody."
When others at the party asked where Ramirez was killed, Pennington said that she was "over by the hill, supposedly somewhere," Cary testified. "He didn't know for sure."
Five days later, police found her body on a hill above Memory Grove, near 700 North and Bonneville Boulevard.
State medical examiner Dr. Todd Grey testified that the condition of her body indicated she had been dead for about five days. Officers found her shirt open and her bra torn in half; one half of the bra was around her neck, apparently used to strangle her, Grey said.
Pennington, now 46, is charged with one count of murder in the second degree, a first-degree felony.
His attorneys questioned Murray's story, noting it had changed multiple times during police interviews in 1986, 2008, 2010 and 2011.
Murray said he withheld information because he was scared.
"I just went into that mode of, 'I don't know nothing,'" Murray said. "The code of the streets is, you don't see nothing, you don't know nothing, and ... a good snitch is a dead snitch."
Defenders also questioned Cary's memory of events over the past 26 years. Cary said he suffers from multiple mental health problems, has undergone four surgeries to remove lesions from his brain and habitually used recreational drugs.
Thursday's testimony ended shortly after Cary told Judge Robin Reese he had not received his medication that day and was becoming agitated. The hearing is scheduled to resume Friday.
Pennington was charged with the slaying last June. In November, he was extradited to Utah from Missouri, where he was serving time in prison.