The 22-year-old is on the cusp of winning his first Scotland cap and ended a fine season by helping the Terrors land the Scottish Cup.
Wolves, who signed Christophe Berra from Hearts in February 2009, have now played down speculation they could be in for Kenneth.
Molineux chief executive Jez Moxey has confirmed manager Mick McCarthy has been at Dundee United's games, but says he was not watching Kenneth.
"Mick may well have watched him, but he was probably watching other players at the game," said Moxey. "He's not on our list of targets."
Newly-promoted Blackpool are now the favourites to land Kenneth with Wolves out of the picture, with reports hinting at a £1million bid for the Tannadice star.