They have two serious incidents happening on the same night. Theo's murder, and the attack on Sarah/disappearance of Jodie (I actually can't remember if shes reammerged to David and Shona, pretty sure she has)
Realistically, two things like that on the same street at same time, would be being considered as potentially connected by Kit and Lisa, but they haven't even considered it.
Im surprised nobody is talking about the watch, as I assume Theo was tracking it while chasing Todd. Somebody may have picked it up.
Jodie would be my guess as the killer. She had nowhere to go, and she likes to take things, I can imagine her picking the watch up from the street and then coming across the scaffolding with the route to Todd's house, she may know about Todd going away and the house potentially being empty, so sneaks in to sleep there overnight, only for Theo to track the watch to the house. Then it ends up with a fight and Theo falling off the scaffolding.
Apologise if ive got a piece of the context wrong. Maybe someone already mentioned where the watch is now and I missed it, or something.