They were never asked to take it down. There was an ongoing dispute between the two neighbours about something else, and neighbour 1* stuck it there to deliberately offend neighbour 2 because neighbour 2 was black. Neighbour 2 then reported it to the police.
*A high level enquiry has since decided there's not enough evidence to prove neighbour 1 actually put it in her own window. It could have been the tooth fairy or sombody else.