According to the court documents made public today, then Milwaukee Archbishop Rembert G. Weakland wrote to Ratzinger's office explaining he had just learned of the accusations against Murphy and seeking advice on how to handle the situation.
The congregation's second in command, Cardinal Tarciscio Bertone, now the Vatican's secretary of state, told the Wisconsin bishop to begin a secret trial.
In a personal appeal to Ratzinger, Murphy wrote, "I have just recently suffered another stroke which has left me in a weakened state. I have repented of any of my past transgressions, and have been living peaceably in northern Wisconsin for 24 years. I simply want to live out the time that I have left in the dignity of my priesthood."
"I ask your kind assistance in this matter," he wrote the man who would be pope within a decade.
Bertone then sent a letter to the diocese to stop the secret trial.
The archbishop then handling the case, Bishop Raphael Fliss, objected, saying in a letter to Bertone that "I have come to the conclusion that scandal cannot be sufficiently repaired, nor justice sufficiently restored, without a judicial trial against Fr. Murphy."
Fliss and Weakland then met with Bertone in Rome and told Bertone that Murphy had no sense of remorse and didn't seem to realize the gravity of what he had done, according to a Vatican summary of the meeting.
But Bertone insisted that there weren't "sufficient elements to institute a canonical process" against Murphy.
The victims of Murphy remain angry over the revelations.
"The pope knew about it. He handled sex abuse cases. He should be accountable. He did nothing," said Arthur Budzinski , 61, during a news conference today in Milwaukee. Budzinski said he was abused by Murphy when he was 12 years old and was ignored by police and later Vatican officials when he came forward.
Budzinski said the abuse made with him withdraw as a child, causing him to become "embarrassed and very depressed."
The Associated Press contributed to this report.