Kathryn Schroeder, held as a material witness since she left the Branch Davidian compound March 12, almost lost her chains and gained her freedom Thursday.

U.S. Magistrate Dennis Green ordered her released from federal custody. However, Green stayed his order until government prosecutors can appeal it to a higher court.

It was the second hearing in Green’s courtroom to determine if Schroeder, 30, should continue to be held as a material witness likely to flee if let out of prison.

Prosecutors sought the second hearing to introduce new evidence, including the suggestion that gunfire came from Schroeder’s room during the ill-fated Feb. 28 raid that left four federal agents dead. Agents continue to ring the compound as the standoff enters its 20th day.

A hearing on the government’s appeal is set for Wednesday before U.S. District Judge Walter Smith.

Schroeder is the mother of four children ranging in age from 2 to 11 and the widow of Michael Schroeder, who apparently was killed in the raid. All four children were allowed to leave the compound.

Schroeder’s attorney, Scott Peterson, said Thursday’s rulings sends “mixed signals” to those inside the compound watching to see how Schroeder is treated by authorities.

FBI officials have said that the 100 or so people still inside the compound have been drawing up a list of legal concerns they want answered before they consider coming out.

“The fact that the judge ordered a release on conditions is a positive message,” Peterson told reporters outside Waco federal courthouse.

“The fact that the government is pushing hard to detain her is a negative.”

Wayne Appelt, a special agent with the Bureau of Alcohol, Tobacco and Firearms, told Green that negotiators believe Schroeder held a position of authority inside the Branch Davidian compound. He said an unnamed witness told him that Schroeder was referred to as “Sarge” by other Davidians because she had command over certain tasks there and that she had been seen engaging in target practice.

Appelt said another witness told him that Schroeder often went about armed. He also said Schroeder apparently led the charge in demanding milk for the children from negotiators.

Peterson asked Appelt if he was aware that Schroeder had been a sergeant in the Air Force – hence the “Sarge” nickname. He also asked Appelt if target practice were an illegal activity in the state of Texas.

Then, under questioning from Johnston, Appelt said at least one ATF agent on the raid told him gunfire came from what was identified as Schroeder’s room.

“Shots? Coming out of the room she was in?” Johnston asked.

“Yes, sir,” Appelt said.

Johnston later declined to say whether authorities plan to charge Schroeder in connection with the raid.

In an effort to show that Davidians had generally been trustworthy members of the community, Peterson called attorney Gary Coker to the stand. Coker represented cult leader Vernon Howell and seven followers on 1987 attempted murder charges. Coker said that the eight showed up for every hearing and even paid his fee on time.

But Johnston also hinted that the Davidians might be in a little more trouble this time.

“Do you think there might be a difference between an attempted murder case in a Texas court, where you would face a maximum of 20 years, or a capital murder case with the death penalty or facing a federal murder charge?” he asked Appelt.

“I believe if the defendant felt the results of a hearing could end up with him locked up the rest of his life, or executed, he would be far less likely to show up in court,” Appelt said.

Read the Tribune-Herald's 7-part investigative series on the inner workings of the Branch Davidians. Hours after Part Two appeared in print, the ATF raided the group's compound.

Read the Tribune-Herald’s account of the ATF raid on the Branch Davidian compound on Feb. 28, 1993. Four ATF agents and six in the compound were killed in the gunfight.

Read the daily news accounts of the 51-day siege at the Branch Davidian compound near Elk, which began Feb. 28 and lasted until April.

Read the accounts of April 19 and beyond: FBI agents began inserting canisters of tear gas into the Branch Davidian compound in the early morning hours. By noon, it was on fire.