What is the background and justification for not punishing the master of the slave girl whom he killed for insulting the Messenger of Allah, may Allah bless him and grant him peace, and is this due to not paying blood money to the guardians of disbelievers who harm Muslims?

The mentioned story is true and concerns a blind man who had a concubine who used to insult the Prophet, peace and blessings be upon him, so he killed her. When the Prophet learned of this, he did not retaliate against him and declared her blood to be without retribution because she had made it lawful to insult the Prophet, peace and blessings be upon him. The story is proof that whoever insults the Prophet, peace and blessings be upon him, is to be killed, whether they are Muslim, a Dhimmi, or someone with a covenant, and that killing a Dhimmi unjustly is a grave and forbidden sin.