I have done everything I can think of to get this to start.

• Have gone in and out of the back door several times over several days.
  
• Pickpocketed the Mother and got the key to go to the house and read the letters and the book on the Butcher.
  
• Have permission from the Jarl to buy the house.
  
• On 1 save I even picked the Butcher and took the Journal out of his locker.

My suggestion to fix the quest is that once you have permission to buy the house you have 2 choices either start and finish "Blood on the Ice" or be able to just go kill the butcher to end it.

If I have missed any trick to try and jumpstart this one please tell me, I really want that house.