Trent Jennings had been stopped by police south of Coffs Harbour on Friday night but was allowed to drive on after being issued with a fine.
Jennings had stolen the car the previous day, while also on day leave, after tying up a man he met on the internet and making off with his black Mercedes.
Jennings was hospitalised eight years ago after he tied up and stabbed to death Giuseppe Vitale in a sex encounter at a park at Narwee.
Despite returning to the hospital late on Thursday night, he was allowed out again on Friday, which coincided with the eighth anniversary of the killing.
Jennings escaped conviction for murder on the grounds of mental illness after having taken a cocktail of drugs and claiming to have heard voices telling him to kill Vitale.
Image: Found asleep… Trent Jennings