The discovery and handover of the body came one day after an Islamic Web site claimed that militants had beheaded a second American hostage in Iraq in two days after a 24-hour deadline ran out for meeting their demand to release women in U.S. and British custody in Iraq.
The claim, posted Tuesday night under the pseudonym Abu Maysara al-Iraqi, could not be verified. His postings have in the past proved correct, but a video of the killing by Jordanian militant Abu Musab al-Zarqawi's Tawhid and Jihad group that was pledged to be released "soon" had not materialized by early Wednesday.
American engineer Eugene Armstrong, 52, was the first of three men abducted Thursday to be killed, apparently Monday, and graphic footage of his beheading was posted on Islamic Web sites within an hour of an al-Iraqi statement promising it.
American Jack Hensley, who would have been 49 Wednesday, and Briton Kenneth Bigley, 62, were kidnapped with Armstrong. The brief statement did not identify the latest victim by name, but indicated it was Hensley.
"The nation's zealous sons slaughtered the second American hostage ... after the end of the deadline ... We will provide you with film of the slaughter soon, God willing," said the statement.
Militants had said they would kill the three hostages unless all Muslim women held in U.S.-run prisons in Iraq were released.
In other recent developments:
Wednesday morning - hours after the claim of the second beheading - the Iraqi Justice Ministry said the government and the U.S. forces had decided to free a female prisoner in American custody. The authorities say there are only two women in the coalition forces' custody in Iraq.
Ministry spokesman Noori Abdul-Rahim Ibrahim said Rihab Rashid Taha, a scientist dubbed "Dr. Germ" for her work on biological weapons, would be conditionally released on bail. He denied the decision is linked to the kidnappers' demands.
In Britain, the family of hostage Kenneth Bigley welcomed the release. Referring to the kidnappers, Bigley's brother Paul told British Broadcasting Corp. radio: "Hopefully they will pick this up on the media, and show that they have a gram of decency in them by releasing Ken."
Bigley's son, Craig, 33, had appealed to British Prime Minister Tony Blair, saying on television Tuesday: "Please meet the demands and release my father - two women for two men."
Late Tuesday night, an expanded version of the al-Iraqi posting saying a second American had been killed appeared on a separate Web site warning that the British hostage would be the next to die. It did not contain any new deadline, and its authenticity was not known.
Hensley, who is married and has a 13-year-old daughter, Sara, is from Marietta, Georgia. His wife, Patricia, went on television Tuesday with several appeals aimed directly at the kidnappers asking them to spare her husband's life.
Ty Hensley, the second hostage's brother, told the CBS News Early Show that "his reason for going was he wanted to make some money for his family, just to keep the bills paid."
Jack Hensley worked to rebuild a museum, for an oil company, on the water and electrical grids. Asked if his brother was aware of the danger in Iraq, Ty Hensely said, "He was."
The U.S. Central Intelligence Agency determined with a "high degree of confidence" that al-Zarqawi was the masked militant who read out the lengthy statement before drawing a knife and beheading Armstrong.
The U.S. military says the other woman in its custody in Iraq is Huda Salih Mahdi Ammash, a biotech researcher known as "Mrs. Anthrax."
Sheik Abdul-Sattar Abdul-Jabbar, a member of the Association of Muslim Scholars, conservative Iraqi clerics who oppose the U.S. presence in Iraq but have interceded in the past to win the release of foreign hostages, questioned the claim of only two female prisoners in U.S. and British custody.
Abdul-Jabbar told al-Jazeera pan-Arab satellite television there are "tens, perhaps hundreds of Iraqi women prisoners in the occupation's jail that were supposed to be released before this tragedy."
The spiraling violence in Iraq has raised doubts about whether elections can be held as planned in January.
"We are trying as best we can to support security and stability," Sen. Goerge Allen., R-Va., told the Early Show. "We're trying to get the United Nations and other countries in the United Nations to help out, but the march toward elections must go forward."