Foley was released and died at her parents' Christchurch home in March 2010, aged 33. The coroner is investigating the death, a suspected suicide.
In a note left for her parents, she pleaded with them to get "justice" for her.
The IPCA report found Forman was not a trained specialist adult sexual assault investigator as was required under police policy and Foley was not formally interviewed by such a specialist.
"Had she been, she may have provided further clarification on the circumstances of the offending and whether there were potential witnesses," the report said.
"The alleged offending took place in public areas of the psychiatric clinic; therefore it is not impossible to envisage that a patient or staff member could have witnessed the offending without Tineke being aware."
The report also noted Forman did not formally interview the nurse or potential witnesses.
"This was unfair to (the nurse), who had no opportunity to give his version of events until he was interviewed on 24 June, 2010, eight months after Tineke made her complaint."
It added Forman "demonstrated that he had reached such a predetermined view on the outcome of the investigation before all the evidence had been assessed".
The conclusions state that Forman's "omissions and errors" were "unfair and undesirable".
Keane, the supervising officer, was also criticised for "poor oversight" of the case.
Tineke's mother Ebony Foley, a former rest home manager, said the IPCA report was partial vindication after a two-year battle which has cost her $10,000 in legal fees.
She hoped the coroner's ruling, due on November 8, which would have been Tineke's 36th birthday, would allow her to grieve finally for her "miracle" daughter.
She said Tineke was diagnosed with Asperger's syndrome and had bouts of severe mental problems since she was 16. Her mother believed Tineke had suffered sexual abuse as a child, which affected her as she reached adulthood.
Ebony, who moved to Taumarunui after her daughter's death, said: "She called herself a freak, but we never found her weird. She was our miracle. She was innocent and pure."
A separate inquiry by the Nursing Council's Professional Conduct Committee found Foley's "allegations were not supported by cogent and compelling evidence" and no further action was warranted.