Anthony "Tony" Jones on Tuesday retracted his alibi and statement to police that he was picking up a hot water system for his neighbours on September 12, 2014, in the NSW Coroners Court.

An inquest is examining Jones' movements, with his ex-wife and son claiming he lied about his whereabouts the day of and day after three-year-old William went missing.

The boy vanished from the front yard of his foster grandparents' home at Kendall, about 20 minutes drive from where Jones and his family lived in Wauchope. He is believed to have been abducted.

Jones previously explained he was helping neighbours pick up and install the hot water system on September 12 but said on Tuesday that statement was incorrect.

His ex-wife Debbie Jones told the court on Monday he told her he was going out into the nearby state forest to collect scrap metal along with his son Duane Gardoll.

However, Mr Gardoll arrived at their house mid-morning, and he said on Tuesday his father neither made plans with him nor arrived to pick him up.

Asked about his recollections of that day, Jones said he had "none whatsoever" before claiming he might have been having sex with his next door neighbour.

"I have no recollection," Jones told the court.

"I'll be honest, if I wasn't scrapping I was probably sleeping with Debbie's friend next door."

The court heard Jones spent three years in custody until his release in December 2017 before being returned to custody in 2018.

Jones admitted he was a chronic drinker as well as at one time being addicted to amphetamines.

Asked by counsel assisting the coroner Gerard Craddock SC if on most days he would drink until he got drunk, he replied: "Yeah, ok, I'll go with that."

Debbie Jones has accused her ex-husband of returning home drunk on the day William disappeared.

Mr Gardoll said on the day after William disappeared, he suggested they get money from a local community centre for motorbike fuel so they could join the search for the missing toddler in the state forest

But instead he used the money he was given to buy beer and drank with his mate Paul Bickford, who has also been named as a person of interest.

"I rang him and asked what was going on," Mr Gardoll told the court.

"He said he got 20 dollars instead of a fuel voucher and he bought long necks with it and he was going out with his mate Paul for the day."

Mr Gardoll told the court Jones and Bickford were "best mates".

However Jones claimed he socialised with Bickford on two occasions outside of seeing him at meetings of the Grandparents as Parents Again association, to which they both belonged.

On Monday, Max Jones - who was not related to Jones - told the court he had seen Jones sitting in a fogged-up car in a car park adjoining the Henry Kendall Reserve on the day William disappeared.

It was claimed Jones was sitting in a car similar to a white Toyota station wagon owned by Debbie Jones.

However Jones denied having ever been to the area and said his emphysema would have prevented him from sitting in a fogged up car.

"The person who recognised me needs to go see an optometrist," he said.

"I was never allowed to drive Debbie's car."

Australian Associated Press