Colleen was one of the three Aboriginal children believed to have been murdered in the space of five months near the Bowraville Aboriginal mission between 1990 and 1991.
The Court of Criminal Appeal heard that several people recalled talking with the 16-year-old in the days after she allegedly disappeared from a party.
Her alleged killer was previously acquitted of murdering Evelyn Greenup, 4, and Clinton Speedy-Duroux, 6, from Bowraville. The NSW attorney-general wants the acquittals quashed so he can face a retrial over the Aboriginal children's deaths and be tried for Colleen's death.
Unlike the other two children, Colleen's body has never been located and no-one has ever been charged over her death. Lawyers for the Attorney-General say there is fresh and compelling evidence relating to her disappearance which justifies re-trying the man.
Defence Barrister, Julia Roy argued that it would be an unfair trial due to extensive coverage of the case and a generalised prejudice formed against him by community members.
Ms Roy said this prejudice had a contamination effect that is very difficult to guard against and very difficult to warn a jury against, not just on Colleen's case but for all three children.
She also said there was evidence to contradict that the 16-year-old went missing the night of the Thursday house party.
A man reportedly informed police he slept with Colleen on the Friday night and also that he spoke with her on the Saturday morning. Two other people have given evidence to police saying they spoke with her on the Saturday, Ms Roy said.
The lawyer said the whereabouts of Colleen's boyfriend at the time weren't known and there were also people from out-of-towners in Bowraville that weekend for a football game.
Another male, seen in a car nearby after Colleen left the Thursday house party, had refused to talk to police about his movements that night, Ms Roy said.
The historic hearing is the first test of the state's Double Jeopardy laws. The hearing is expected to continue until tomorrow.