However, when he appeared before the board last month, he had changed his mind.
He had remained at Waikeria and obtained release to work on the landscaping team, spending some time outside the wire in Hamilton.
Lyon claimed he eventually wanted to further his study but board chairman Sir Ron Young said he was "concerned" by the about-turn.
"In one sense, this decision reflects a number of other concerning matters including his complaint about previous Parole Board hearings and decisions and his complaint about the accuracy of some psychological reports," Sir Ron said.
"These complaints and his decision to stay at Waikeria illustrate a reluctance to take guidance and for him to reflect on his actions when subject to comment he sees as critical."
Lyon, the board heard, was a minimum-security prisoner and a psychologist determined he was a medium-low risk of sexual offending as well as a low risk of further violence.
The killer's empathy, or lack thereof, had been cited at previous parole hearings as a reason why he should not be released.
Sir Ron said recent written correspondence from Lyon to the board had caused it to question the issue again.
"Mr Lyon stressed today that he was empathetic and did have great feelings of sorrow for his victim's family," he said.
Sir Ron urged the prisoner to make a swift decision on his future.
"If he does wish to do his PhD and he does want to be released to Palmerston North, then he will need to go to Manawatu Prison. He will need to have a period of time at that prison, undertaking guided releases so that we can be satisfied before his release he is familiar with the community and familiar with where he is going to be released to."
Lyon will next come before the Parole Board in September.
