A row of dilapidated swings is the only sign that Phoenix gardens in central London was intended as a children's playground. The grounds, in the courtyard of St Giles's church, Covent Garden, are a haven for drug addicts who hide in the bushes to shoot up.

It was here that 12-year-old Diego Piniero-Villar befriended Edward Alexander Crowley, a drifter four times his age, nearly two years ago.

According to Diego's mother, her son took pity on Crowley, 52, when other children started throwing stones at him. It was a kindness that cost him his life.

Diego could not have known the scruffy man carrying a plastic bag had a long history of mental illness and that he had developed an obsession with the occult.

Crowley's and Diego's relationship started with conversations by the swings and trips to play games at a local arcade, and were followed with visits to the swimming baths. Crowley bought Diego gifts and treats such as hamburgers, and for a while the schoolboy seemed flattered by the attention.

Police have never found any evidence that Crowley abused Diego, but the relationship was uncomfortably physical; it involved play-fights in which Crowley licked his ear and tickled his navel.

Diego appears to have kept their friendship a secret until the summer of 1999, when his mother became suspicious and contacted police. Officers were already on the case. Crowley had come to their attention in June that year, when residents reported seeing him approach children at Phoenix gardens.

In September 1999, Crowley went to Holborn police station to confess he was having a relationship with a 12-year-old boy, which he described as "loving but not primarily sexual". He then retracted the claim.

The subsequent investigation disturbed officers; a psychiatric nurse concluded Crowley was "a definite risk to young boys", and Diego's mother told them she had received calls from an anonymous man asking for her son. The boy, who by this time was unhappy with Crowley's attentions, was interviewed but gave no evidence of sexual abuse.

When detectives went to Phoenix gardens, they found messages painted with correction fluid on the swing seats. "I will always love you, Diego," stated one. "Please forgive me for everything. I couldn't stand the pain. One day you'll know how much you hurt me. How much I need you."

Another, dated November 2 1999, read: "Always cheat others before they cheat you - if they are clever enough. I wasn't and I wouldn't want to be."

It was addressed to "Bravo, mi chico Latino".

Crowley was arrested on November 3 on suspicion of indecently assaulting Diego, but released almost immediately for lack of evidence.

Crowley was not put off. On December 6, he went to Canada Blanch, the independent school Diego attended in west London, and painted in Spanish and English, this message across three doors. "Why did you cheat me Diego? Why all the lies? I should hate you but I don't. Alex."

He was arrested outside the school, and appeared before Marylebone magistrates the following day to plead guilty to causing criminal damage. He was given a two-year conditional discharge and released back on the streets.

Diego was clearly at risk. He was given a police mobile phone, enabling him to dial 999. Patrols around the school were stepped up and his step-father Juan Fernandez began escorting him to west London.

A few days later, Crowley was charged with harassment and remanded in custody by Highbury magistrates for mental health assessment. According to Camden council, a forensic psychiatrist who saw Crowley in prison concluded he was "dangerous and should be detained".

On March 20, three and a half months after his arrest, the CPS went back to magistrates and admitted the case was not ready to go to crown court for trial. Despite the objections of the police, district judge Dorothy Quick granted Crowley bail on strict conditions.

A charge of gross indecency was dropped a week later.

Crowley was ordered not to contact Diego, attend the boy's home or school, or go to Phoenix gardens. He was also to report daily at a police station, though this was relaxed after two weeks. Neither the police nor social services knew where he was. Crowley was not on medication and he was not under supervision from social services.

Mentally unstable and bearing a grudge that had festered in prison over 14 weeks, Crowley sought revenge.

On the evening of May 7, Diego's stepfather asked Diego and his stepbrother Roberto, 15, to run an errand.

As they passed Phoenix gardens at 8pm, they were confronted by Crowley, who was armed with a kitchen knife. He slashed the older boy, then turned on Diego, who managed to dial 999 on his mobile phone. The operator only heard his screams as he was stabbed more than 20 times. Diego was pronounced dead on arrival at St Thomas's hospital.

After the murder, police began to unravel Crowley's past and his fascination with the occult. They discovered his name was not Crowley. He was born Henry Allen Bibby in Middlesbrough in 1948, and had spent most of his adult life jobless and drifting. His medical records showed he had tried to commit suicide by drugs overdose on at least seven occasions.

His fascination with the occult can be traced from 1998, when he changed his name by deed poll to Edward Alexander Crowley, apparently in honour of the black arts magician Aleister Crowley, who styled himself "the wickedest man alive" and "the Beast". Aleister Crowley was born Edward Alexander Crowley and he died in 1947.

On one of the websites dedicated to the magician, police found the quote: "A male child of perfect innocence and high intelligence is the most satisfactory and suitable victim."

When Crowley was arrested after the murder, police officers found in his bag a piece of folded paper covered in references to child sacrifice in religion, black magic and classical myth. The Latin words "Delendus est D.Piniero - "Piniero must be destroyed" - were at the top of the page.