A former Maryland prison inmate testified yesterday that Hadden Clark talked about finding little Michele Dorr playing with dolls in his niece's bedroom before he cut her across the chest with a 12-inch butcher knife, clasped a hand over the child's mouth and slashed her throat.

"He said she was pretty much in shock," John Fridley, now a mechanic in Baltimore, told the 12 jurors in a silent Rockville courtroom. "He told me he almost decapitated her."

His words were almost drowned out by loud sobbing as Michele's aunt, Sue Schellinger, ran from the courtroom, followed by Michele's father, Carl Dorr, and his wife, Margie. Michele's mother, Dee Dee Appleby, stared straight ahead in the front row as her daughter, Michele's older half-sister, cried next to her.

Clark stared ahead passively as jurors, who have sometimes looked sleepy or bored, appeared riveted to the witness stand.

It was the first time that the jury and Michele's family had heard from anyone other than Montgomery County police and prosecutors about how the 6-year-old allegedly died May 31, 1986. She was last seen splashing around a green, turtle-shaped play pool in her father's back yard in Silver Spring, two houses down from the house where Clark had lived with his brother. Michele's body has never been found.

Jurors heard the former inmate's account a few hours after Montgomery police detective Edward Tarney showed them 41 knives, with glimmering blades in all shapes and sizes. Tarney said police found the knives in 1995 among Clark's possessions in a storage shed on his family's Rhode Island property.

Jurors did not hear why Clark, 47, was incarcerated in Patuxent Institute in Jessup in 1994, at the same time Fridley was serving a 10-year sentence for burglary. Montgomery Circuit Court Judge Michael D. Mason ruled that it would be too prejudicial for jurors to hear that Clark is serving a 30-year sentence for the 1992 slaying of Laura Houghteling, 23.

Jurors also were not permitted to hear a tape recording of the conversation that Clark allegedly had with the inmates--or even that such a recording exists--because another judge ruled that the inmates had recorded it illegally.

Fridley testified that he and another inmate, Ben Chambers, spoke with Clark in Clark's and Chambers's cell in August 1994. Chambers hoped they could use a statement from Clark as a bargaining chip for their own early release, Fridley said.

"I asked him if he killed Michele Dorr," said Fridley, 42, who wore a gold hoop earring and had a tattoo atop his shaved head. "He said 'yes' . . . . He said he did it with a knife."

Fridley said Clark told them he was alone in his brother's Silver Spring home when he heard a noise upstairs and thought it was a burglar. Clark then said he went out to his truck to get his "tools" and, finding Michele in his niece's upstairs bedroom, killed her, Fridley testified. Clark said he wrapped Michele's body in a green garbage bag, stuffed it in a duffel bag and carried it to his truck.

Clark's attorneys argued that Fridley and other inmates scheduled to testify heard about Michele's disappearance on television and hoped they would be rewarded with early releases if they told police that Clark confessed to it.