I put wulfgaar behind bars and I have even gone into that museum guy's home to steal his key off of him and get his journal (even though the game didn't tell me to do it yet). I can literally read that he is the butcher and yet the guards won't indicate anything to me about the killer still being loose. I have waited months on end in game time and they still don't tell me the butcher is still out killing people. What the hell?

i think it doesnt matter if you catch the real killer or frame the mage, just go and talk to the guy in the main hall to complete the quest?

You weren't supposed to arrest the mage. Since you did, you have now broken the quest and can require console commands on PC. If you are on console, you are screwed. That's what you get for not investigating further.

no on another playthrough i arrested the mage and THEN the guards told me that the killer was still loose. It prompted me to talk to other NPCs about it and I found the real killer.

I put the mage away... and I guess the killings stopped because no one has mentioned differently.

yeah it's interesting because the first time I was told the murders were still going on. I was then prompted to talk to wulfgar in prison. He told me of course I had the wrong person and asked why I thought it was him. I told him I found his journal and he said "Journal?! I don't even keep a journal!" and then I showed him the amulet and he said that necromancy was indeed involved and then it progressed from there. I wish I could finish it properly.