Having been released from prison, Billy arrives in the village to see his son Andy, who is fostered by the Sugden family. Andy chooses to live with his real father. Billy is a criminal and spends most of his time trying to deceive his fellow residents. This culminates with him attempting an armed robbery on the village Post Office on Christmas Day 1998. Postmaster Vic Windsor is fatally injured in the robbery. Billy is arrested and later sent to prison for murder. Andy is then adopted by the Sugden family.
In 2003, Andy is surprised to find a boy in his house named Daz, claiming to be his half-brother. Daz tells Andy they share a father, and Andy initially refuses to have anything to do with Daz. Andy later decides to visit Billy in prison, where he confirms that Daz is really his half-brother and that he was the one who sent Daz in search of Andy.
Billy isn't mentioned again until late 2006, when Vic's widow Viv and her current husband Bob Hope receive a letter informing them that Billy is up for parole. Kelly happens to intercept the letter and is disgusted to discover that her father's murderer is going to be released. The Sugden family are also shocked to learn Billy was paroled and is devastated to learn that Billy is opposing Jack and Diane Sugden's application to adopt Daz. Billy claims that he does not want to lose another son. Jack is skeptical about this, believing it is just a plot to get bail. When Jack questions Daz about his father, it is clear that he is not against him. Billy is released from prison and returns to Emmerdale, and immediately goes to find his sons. Andy makes it very clear he wants nothing to do with Billy, though Daz seems unsure and later visits Billy alone, in an attempt to get to know him better.
Billy decides to take a night shift job as a rubbish collector. Kelly pays Eli Dingle to tamper with the brakes on Billy's vehicle to cause an accident. He later sees Victoria Sugden being harassed by an older male and rescues her. Billy offers Victoria a lift home, unaware that the truck he is driving is faulty. While driving back, the brakes fail to work causing Billy to crash into a lake. He escapes from the vehicle but realises that Victoria is trapped. He dives under water to several times to provide her with oxygen until paramedics rescue her. Jack reluctantly thanks Billy for risking his own life to save Victoria. He informs him that it still does not change the situation.
Billy and Diane realise they have feelings for each other and decide they should not act on their feelings. Diane sets Billy up on a date with her sister Val Lambert and the pair share a kiss. Diane then becomes jealous of their relationship. Billy argues with Diane over her interfering in his relationship. Diane becomes angry and pushes Billy into a wall. They try to sort out their differences; Billy then declares his love for Diane and they kiss. Billy then tries to force Diane to choose between him and Jack. Diane cannot cope with the confusion and goes away for a while. Billy steals Debbie's car to try and catch Diane before she leaves, but the police arrest him before he gets to her. Val visits Billy in custody and realises that he has been seeing Diane. Victoria discovers the truth about their affair and informs Jack. Jack, infuriated, goes face-to-face with Diane. She tries to reason with him, but Jack storms out and punches Billy. Diane pleads with them to stop, but the fight is eventually broken up. Victoria then insults Billy to the point that he reveals the truth about her mother's death. Diane tells Billy that she does not love him and simply enjoyed the element of danger that their relationship created. Victoria sets a fire in her house to get revenge on her family. Billy rescues Andy and Jack, but an explosion traps Billy. Everyone presumes that Billy is dead until he is pulled from the fire. Billy recovers in hospital with Daz keeping a vigil by his bedside. Whilst Daz is asleep, Billy discharges himself and leaves the hospital.
- Vic Windsor, 25th December 1998 (accidental) - Head injuries sustained during struggle with Billy when he pushes Vic who hits his head on a fridge cabinet.
"I'm sorry if I've let you down" - Final line to Edna Birch.