The immunity deal was conditional on them finding her remains where he said they would find them, plus some other specifications relating to exactly when the remains got there.
Apparently LE didn't find anything there when they executed their warrants, so he was lying.
The problem for the prosecutor is that they were depending on his account of what happened to be accurate, and the remains would have served to corroborate that. But no remains meant that the deal he received for his other crimes could be viewed at trial as an incentive to lie about what happened to Holly. If his testimony is their primary evidence they will be stuck in a hard place since they have already filed homicide charges in the Bobo case. If they had to drop the charges because of this, double jeopardy would kick in, and they would not be able to recharge even if other evidence appear later.
To solve that problem, they have withdrawn immunity (as they are entitled to do as per the agreement). This left him with no protection on the unrelated charges. Also, since he had provided them with statements concerning what happened Holly, he would be implicated in that and can therefore be charged. They could use his statements against him in trial, which would no longer be compromised by the deal.
To get himself out of this mess and avoid homicide charges he would have to testify for the prosecution, but without the deal on his unrelated charges.
This of course raises an interesting question, if the primary evidence they have is the informers testimony, can they really be sure that he wasn't just telling them what they wanted to hear so he could get out of unrelated charges?
I suspect that they are desperately looking for some sort of solid corroboration in the mean time.