I agree that the five pound note should have led to Sutcliffe's arrest, though probably not immediately. There were actually two phases to that part of the inquiry, and both brought the police to Sutcliffe's door. The first time, late in 1977, they saw him twice but at that point he was one of a few thousand men who, to the police's knowledge, could have received the fiver. At that stage, there probably wasn't so much evidence against him that he stood out.
But as time went on, it should have become obvious that he was worth a serious look: he was a dead ringer for the Marilyn Moore photofit; he was one of a fairly small number of men whose car had been logged not only in the red-light areas in the nearby cities of Bradford and Leeds but also across the Pennines in Manchester; he'd owned vehicles that could have been fitted with tyres having the treads found at various murder scenes; he had a prior criminal conviction for being found in a red-light area in possession of a hammer (the prosecution was for the old offence of "going equipped to steal", so officers assumed the circumstances were relatively innocuous without ever really checking); and he had a shoe size that could have matched the boot prints left at at least two murder scenes, plus wore work boots of the right type at a number of his interviews.
All that coupled with the fact that he could have received the five pound note should have pointed to him being a pretty compelling suspect. Unfortunately, there were four index cards in the system for Sutcliffe so the evidence against him was presumably spread across those disparate entries and nobody was able to see the weight of that evidence in a single bloc.
The second part of the five pound note inquiry reduced the number of potential recipients to only 241, which was a phenomenal effort by the investigators responsible. It led to more interviews for him in January 1980, and it's at this point that I really think he should have been caught. This was a fantastic clue - the killer basically had to be (and indeed was) on that list of 241 names. They should have thrown massive resources into looking at every even mildly credible suspect on the list, and that would surely have led them finally to take a serious look at Sutcliffe.
Unfortunately, they were still hung up on the north-east angle, so I don't think the senior officers' hearts were really in it in terms of pursuing that aspect of the investigation. In addition, when identifying who of the 241 had previously come to the attention of the inquiry and who had prior criminal records, Sutcliffe was ignored even though he should have featured on both lists (the Laptew report still hadn't been finally filed with the relevant index card by that point, more than six months after the interview in question). Sutcliffe then killed at least two more women and attempted to murder at least another two before he was finally caught.
I recently listened to a three-part podcast on Spotify in which the Daily Mail's crime correspondent interviewed the now-retired DCS Chris Gregg, who caught Wearside Jack and, early in his career, had been a young detective working on the Ripper investigation. Gregg also featured in the Netflix documentary.
He said that police had at the time what they called a D-list, with seven or eight names on it of the leading suspects. Every time there was an incident, the whereabouts of these men had to be checked as a matter of priority. Gregg said that Sutcliffe wasn't ever on that list and, indeed, was never regarded as one of the top forty suspects. I'd be interested to know who was on that D-list and what caused them to be such strong suspects (though regrettably we'll never find this out).