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Published 20:32 4 Jul 2018 BST
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"They moved her into admin, they didn't move her to another nursing position," the source said.
"If they did think she was suspicious why didn't they suspend her?"
Her arrest came after an investigation was carried out at the neo-natal unit at Countess of Chester Hospital in Cheshire.
Police began inquiries after a high number of deaths at the hospital between June 2015 and June 2016.
The search has expanded and they are now looking into the deaths of 17 babies in total.
"The investigation into the neonatal unit at The Countess of Chester Hospital is continuing," said Detective Inspector Paul Hughes, who is leading the inquiries.
He said that police had spoken to a large number of people, including a number of medical specialists.
"Since it was first launched in May 2017, a dedicated team of detectives have been working tirelessly on this case.
"This is a highly complex and very sensitive investigation and, as you can appreciate, we need to ensure we do everything we possibly can to try to establish in detail what has led to these baby deaths and collapses.
"This is an extremely difficult time for all the families and it is important to remember that, at the heart of this, there are a number of bereaved families seeking answers as to what happened to their children."
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