She borrowed the shovel because they had locked the shed (per kc to neighbor) and she didnt have a key.
Im thinking Caylee was already in the trunk, and kc was going to bury her in the backyard. She layed Caylees body somewhere in the yard (reason for cadaver dog hits) then attempted to dig a hole. She probably decided it was going to be too difficult, so she put Caylee back in the trunk and took the shovel back. The neighbor said she didnt look dirty, and the shovel wasnt very dirty when she returned it.