I think the biggest problem is that they did nothing, even though they knew Kendrick was dangerous. There were a number of things they could have done without exposing them to other legal problems. If they just did something, I think their liability would have been greatly reduced. They might have even avoided the lawsuit.
"A religion would NEVER not allow a pedo in, after all God forgives all even murders. Nice as it would be, it's not a reality."
That's part of the problem. The truth about pedophiles and the difficulty of reforming them isn't consistent with the way Jehovah's Witnesses and other religious people view the world. They think the Bible can fix these people. If they were to admit that these people will always be dangerous, it would undermine their belief system.
Most religions and pedophiles have something in common. They need external controls to prevent them from harming people. It would be nice if the Watchtower Society would volunteer to keep their children safe, but we know that the threat of serious lawsuits may be the only way to get them to make needed changes.