Yes, assuming the purpose of the local authorities was to arrest his supporters. "Murky" means "unclear," as you indicate.
When you say "source," you seem to suggest a third level. Shahzad is the bad guy. The authorities are arresting his supporters. But they couldn't arrest the source.
When you say: Do you see the "source....."? Do you mean "believe", "think"? If so, then I think "the source" may mean "Taliban leaders" or "fanaticism" and they do have power over his followers.