The former Wigan striker was sentenced to 18 months in prison on Thursday for sexually assaulting a woman and actual bodily harm, and was sacked by the Latics just one hour after the guilty verdict.
Hodgson reflected on his relief that the Cottagers chose not to sign King, with owner Mohamed Al Fayed pulling the plug on the deal because of his criminal past, despite the forward having a medical in January last year.
"I think we got lucky in that we didn't sign him. I'd only just come to the club and didn't know the player at all," he said.
"All I knew about him was his goalscoring record and the information I was able to gather, which was not sufficiently detailed.
"There was a problem with the medical and it also became a problem when we found out he had a jail sentence.
"Mohamed Al Fayed was not at all keen on that so the transfer was allowed to collapse and he went to Wigan instead."
King's agent Tony Finnigan believes the striker will still have a career in football when he is released from prison, although Hodgson insisted that Fulham would never sign him.
"Marlon's agent is fairly clear on the subject and has a very cynical view," he added.
Morals"He believes there is no moral judgement in football and the fact the person we're talking about can score goals will blot any moral values people will have.
"I don't know if that's true, but I know he won't be signed by Fulham.
"The owner of our club would not embrace that type of signing and I as a manager would not embrace it."
The Cottagers take on Liverpool at home on Saturday hoping to build on their comeback at Manchester City last weekend, and Hodgson added that his side has an excellent chance of victory.
"The degree of difficulty in beating the so-called lesser teams is getting higher," he said.
"Sunderland, for example, are a tougher nut to crack this year than in previous years and maybe Tottenham away was an easier fixture for Liverpool a few years ago.
"I know we can't say the league is an even one where the last team is every bit as good as the first, but the standard at the bottom is getting higher and that's making it more difficult for the boys at the top."