Woodsman pawned his axe
Hey folks, like most people I've been replaying old episodes for missed clues and I believe I might have found a few important details.
In ep.1, when you ask the Magic Mirror of the whereabouts of the Woodman's location it shows him stumbling towards the Pawn shop as seen in the preview from ep.4 with its distinctive neon sign. You don't see him enter because of a "closed" sign hanging from the front entrance. But he more than likely sold his magic axe there, some reasons might be because he is a "low life" as expressed by Grendel and he most definitely needed the money.
Jack is connected as well because as we know, he "sometimes" works there, and the preview from ep.4 has led me to believe he must've been the one the Woodsman sold the axe to or Jack then went on to sell the axe to Bloody Mary. Thus, leading to the scene in the preview for ep.4 of Bigby questioning Jack and the Woodsman.
Also, on a side note, I strongly believe that it does not matter anymore who murdered Faith and Lily. It is clear that killing Fables doesn't have any reprecussions if at all. For example, ××EP.3 SPOILERS××, Bigby murdering Tweedle Dum (if that's the option you picked) would require the infamous Big Bad Wolf to take a big bad plunge down the Witching Well for not giving Dum a fair trial. We know Bigby won't get prosecuted since he's our protagonist but it just shows that homocide isn't a big deal. Furthermore, with Fables like Dum and Dee running around amock with shotguns, a murder should not be considered as something so mind boggling. I think the murders were only there to lead the audience into a much more contrived storyline and I would urge fans of TWAU to ask themselves: should finding the murderer be at the top of everyone's priority list for what is going on in the TWAU universe?