I never had a problem with this quest until recently but I was able to move it along by doing the following. I don't know if it will help you though.
I was able to finish the first half with the one person arrested and I had sold the amulet to Calixto. I left Windhelm and stayed away for a while so the second part would trigger. It never did when I went back a few different times. There was never another murder. I ended up just going to the prison and speaking with the prisoner and it gave me the appropriate dialogue to tell him there was another murder, (even though I never saw it and I know where it was supposed to be since I'd done this quest a few times before)...and then it continued on as normal. I hope something in that helps someone get through it.
