Ms Strobel's naked body was found hidden under palm fronds at a sportsground in Lismore, in the NSW northern rivers region, in February 2005, six days after she was reported missing.
Detective Sergeant David Mackie told the inquest on Tuesday he believes the most probable explanation is that Ms Strobel was killed by her then-boyfriend Tobias Moran, who had travelled with her from Germany.
David Mackie said he believed all three of Simone Strobel's companions were involved over her death. (Bianca De Marchi/AAP PHOTOS)
The pair had been touring the east coast of Australia with Mr Moran's sister, Katrin Suckfuell and another German, Jens Martin.
Mr Moran, who now lives in Western Australia, was charged with murder in 2022, but prosecutors opted not to proceed and the charges were withdrawn.
However, Det Mackie maintained in his opinion it is "probable" Mr Moran killed Ms Strobel and said he believes Ms Suckfuell and Mr Martin helped dispose of her body.
"It's your opinion that the three Germans were involved?" counsel assisting Philip Strickland SC asked.
"Yes," the detective replied.
Det Mackie said it was implausible Mr Moran could have acted alone in killing Ms Strobel, because of the difficulty he would have had in dumping her body undetected.
However, Mr Strickland said there were several aspects of Mr Martin's evidence, to German and Australian investigators, which suggested he was telling the truth.
This included revealing he was told by Ms Suckfuell that Ms Strobel was considering returning to Sydney on her own for six months if relationship issues between her and Mr Moran did not improve.
"That evidence, assuming it's true, is really quite unhelpful to Tobias," Mr Strickland said.
He suggested that if Mr Martin was involved, he must be a "very skilled liar" to give previously unheard evidence implicating Mr Moran in the murder, without also implicating himself.
About the time Simone Strobel went missing, witnesses reported hearing screams from a nearby park. (HANDOUT/NSW POLICE)
Det Mackie told the court he believed Mr Martin was being truthful about the night's events, only up to the point where he was involved in disposing of the body.
"He was doing whatever he could to assist in identifying who was involved in Simone's death without implicating himself," Det Mackie said.
About the time Ms Strobel went missing, several witnesses reported hearing screams coming from the vicinity of a nearby park, a known crime hotspot where locals gathered to drink alcohol, the court was told.
The witness reports varied wildly in their details, however were broadly consistent with describing a woman in fear for her life.
"Do you think it is a reasonable hypothesis that at least some of those witnesses heard a scream coming from Simone Strobel?" Mr Strickland asked.
Det Mackie replied it was a reasonable hypothesis, among others, and agreed it was not consistent with the theory Ms Strobel was killed by the German travellers at the caravan park.
On the night of the disappearance, Ms Strobel's group drank heavily in a hotel and continued to consume alcohol and smoke cannabis after returning to their campground, Mr Strickland said on Monday.
The group told police Ms Strobel left their campsite after becoming annoyed with Mr Moran.
"All three of them said Simone left the caravan park and they never saw her again," Mr Strickland said.
The group later lied to police about their drug use and how much they had to drink on the night, as well as the depth of the dispute between Ms Strobel and Mr Moran, Mr Strickland said.
Det Mackie will continue to give evidence on Wednesday.
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