Arlene, a 15-year-old from Castlederg, County Tyrone, vanished after a night at a disco in County Donegal in 1994. Her body has never been found.
The Kent officer, Det Supt Colin Murray, was in charge of investigating child killer and rapist Robert Howard.
The teenager was last seen in a car driven by Howard.
Det Supt Murray said he was told by Police Service of Northern Ireland in 2002 that they had information suggesting Arlene was buried under the kitchen floor of her sister Kathleen's house.
The inquest heard that officers allegedly told Det Supt Murray they did not plan to act on that information.
At the time, Det Supt Murray was investigating Howard for the murder of 14-year-old London schoolgirl Hannah Williams and that the murder of Arlene Arkinson could also be part of the prosecution's case.
He told senior officers within the PSNI he would raise a complaint with the Ombudsman if they did not investigate it properly as it could undermine his case.
He added he did not believe the information was credible, but it was important to disprove it.
Military equipment was used in a ground penetrating radar search which showed Arlene was not buried at Kathleen's home.
Meanwhile, the inquest also heard from Patrick John Heggarty, who had been with Arlene on the night she disappeared.
"Arlene seemed normal. She seemed in good enough form," he said
Mr Heggarty, then about 25, was dating the 18-year-old daughter of Robert Howard's girlfriend.
Howard, Mr Heggarty, his girlfriend and Arlene Arkinson, all travelled to and from Bundoran together and on the return journey an intoxicated Mr Heggarty and his girlfriend were dropped off first.
Although he had heard rumours about Howard's background and allegations of sex offences, he said he had no concerns about Arlene's safety when she was driven off with him, alone late at night.
In the days after Arlene disappeared, at the request of his then girlfriend, Mr Heggarty lied about being in her company, but later told police the truth.
Howard, 71, died at HMP Frankland in County Durham last October while serving a prison sentence for the murder of Hannah Williams.
The case has been adjourned.
A Kent police officer threatened to report the PSNI to the Police Ombudsman, it has emerged during an inquest into Arlene Arkinson's murder.