Chattrice Maihi-Carroll, in her 40s, was found dead in her home on Cottrell Cres, Napier, in January 2008.
The mother of four was naked and had been stabbed several times.
There was a suggestion the killing may have been sexually motivated.
King, one of her neighbours, was initially arrested and charged in relation to the murder.
However, after 16 months in prison, he was released in 2010 after a High Court judge dismissed the murder charge when prosecution lawyers admitted there was not enough evidence to go ahead with a trial.
The case has remained cold ever since and King has been seeking compensation for his time inside.
Maihi-Carroll's murder was also the subject of an episode on TVNZ's Sensing Murder programme last year.
The programme showed Maihi-Carroll's body had accidentally been cleaned before authorities could take any potential swabs of evidence from it.