Presumably he didn't meet the criteria that's why he was free. The question is, should somebody who has stabbed 3 people on the street be freely walking about. If he was unknown to the authorities then it's understandable, however in this case authority has spoken and they did know him. That implies a dysfunction in the system of care for potentially dangerous individuals.
Personally I think we have too many people locked up for the wrong reasons but surely people who are prone to violently attack random strangers are top of any list of who SHOULD be locked up. Locking up does not have to be a 6 foot cell and bread and water BTW, it can be a caring and pleasant enviroment and IMO opinion that's what it should be. The idea of care in the community has only ever been about saving money and has not been about seriously trying to help people with mental health issues.