Long story short, in 1996 Toole confessed to the murder, but he (along with Henry Lee Lucas) was "confessing" to all sorts of murders and eventually he was ruled out as the killer because supposedly he and Lucas were seen out of state. Toole recanted, I can't remember if John Walsh ever bought either story, and the blood from the car he was supposedly in was destroyed (SMART POLICING!). Now, they say it WAS Toole, who has been dead since 1996.
if'n you don't know about Lucas and Toole, man, that's a story in and of itself. The crime library article will blow your mind. They were also the basis of Henry: Portrait of a Serial Killer which is such a fucked up movie I have a hard time watching it to this day.