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The Church and the Inquisition don't like the Space Wolves very much.
This is evidenced in all the clashes that the Space Wolves have fought in against the two other branches of the Imperium.
Is it known to anybody outside of the Space Wolves that the axe Logan wields is actually a Chaos relic?
If so, why hasn't Logan been sanctioned as a heretic?
With an incoherent cry the Khornate Champion struck the flat of Grimnar's Frost Blade, shattering it into a million glittering shards. Doomflayer's moment of triumph was also his last, as the Great Wolf lunged inside his executioner's swing, ripping off his skull-faced helm with a clawed hand and sinking his fangs into the exposed throat underneath. As Doomflayer fell into the bloody river Grimnar snatched up his opponent's crimson-steel axe, cutting a path back to his Wolf Guard through knots of homicidal Khornate Berserkers. For the rest of the campaign on Armageddon Logan fought with the axe, and upon his return to Fenris he had it reforged, dubbing it the Axe Morkai
I would have to imagine that reforging the blade would strip it of any corruption or taint.
Also, not even the Inquisition would mess with The Space Wolves if they could avoid it...
Because it was purged of its taint, and the Inquisition knows better than to mess with the Wolves of Fenris at this point.
When he took the axe Logan Grimnar fought a battle of wills with the Daemon Axe, and won. The Old Wolf fought Chaos in a staring contest, and made Chaos double down. He's THAT badass. But to be sure it would not corrupt the people around him he had it reforged to purify it of its taint and make it usable without the threat of Chaos.
After this there was the First War of Armageddon, which ended up with the Grey Knights and the Inquisition going against the Space Wolves. The Inquisition and Grey Knights took notable losses, and further more a shift within the Inquisition took place. Old Man Logan wrecked faces left and right, forcing the Inquisition to be more compassionate and not so purge-happy lest the Sons of Fenris come and beat them so hard over the head they poop their own skulls. If anyone else had done this they'd be branded heretics and be excommunicated. But not Logan Grimnar, and not the Space Wolves. They commited open treason and got away with it, because nobody wants to start a second Horus Heresy.
And even if the Inquisition did start to fight them, who would join them? Sure, the Imperial Guard might work, but what Space Marine chapter would fight the Space Wolves for being compassionate and standing up for the plight of the common man? No First Founding chapter, not even the Dark Angels, would do that. And if they drag along all their later foundings, you will have a massive reboot of the Horus Heresy, with all Space Marines against the Inquisition, the Grey Knights, the Minotaurs (who are on the side of the High Lords of Terra) and various other smaller armies.
Nobody wants that of course, so the Inuisition and the Space Wolves made something of a deal: the Inquisition would tone down their jerkiness and the Space Wolves would not cut off their heads.
Sanctioning Logan invites a full-scale clash with the Space Wolves.
The answer is probably mundane and practical. Even the Inquisition is pragmatic enough to know that engaging the Wolves with an overwhelming strength of loyalist forces would leave the Imperium greatly destabilized and wide open to Chaos and xenos incursion.
Could the Inquisition actually do it? Yes, it's clear that they have the ability to marshal large chunks of the Imperial Guard, fiercely orthodox marine chapters and militant arms of the Mechanicus to wipe out any single chapter (even one that violates Guilliman's Codex strength guidelines so egrigiously as the Wolves do).
But like taking on any marine chapter, the campaign would be an utter meat-grinder that would spill Inquistion blood across much of the galaxy before the Exterminatus could even be targeted against Fenris. Keep in mind that the Space Wolves are a first founding chapter and can call upon the political favours and sworn oaths amassed over 10,000 years of service across the Imperium. This means that there are plenty of Astropaths, psykers, marine chapters, Guard regiments and so on that would be loyal to the descendants of Russ to the point of escalating the conflict into small-scale heresy of its own. The Inquistion would eventually win, but it wouldn't be worth the losses incurred on the way.
