Villa have agreed to loan out Harewood, with the forward expected to complete a switch to Championship leaders Wolves on Monday.
Former club Forest had also shown an interest, with the relegation strugglers believing Harewood had agreed to go back to the City Ground.
Forest boss Billy Davies said last week: "Apparently, the deal was done - it was more or less signed, sealed and delivered.
"That was the information that I got and then I received a phone call to say that the player had decided to go elsewhere.
"We wish him all the best.that's his choice and it's up to him."
However, Harewood's representative Phil Sproson says the player was not given the option of a move to Forest before Wolves entered the picture.
Sproson said in the Daily Mirror: "Villa said no to Forest, so Marlon spoke to Martin O'Neill who has now decided to loan him out.
"It was only then that Wolves expressed an interest."