When confronted with a conspiracy theory one can also do a kind of plausibility check:

Why do mainstream media (at least some of them) not publish this story? Because after a quick follow up they have decided that the source is completely unreliable.

What do people mentioned as witnesses do when they don't give credence to this story?

Do the 'inconsistencies' mentioned have simple explanations? In most cases in the article above, explanations are easy to find. Someone is trying to fool people by a juxtaposition of irrelevancies and (I guess) wrong informations. For instance, I do not believe that parents would not be shown a body upon demand. The writer simply hopes nobody is following this up. I guess someone did and found the story lacking any believable content.

As far as I see the story originates from aztlan (though the target article above only mentions aztlan in a URL and disguises the sources by stating '...flying around the world' which is very bad style).

Look up 'The nation of Aztlan' in any web search and you'll know who your are dealing with:

July 15, 2001 – "La Voz de Aztlan has just received a report that missing Washington D.C. intern Chandra Levy was seen yesterday afternoon entering an Israeli government building in Tel Aviv which reliable sources believe houses the 'Institution for Intelligence and Special Assignments'. The 'Institution' is the official 'spy' agency for the Israeli government and is more commonly known as the Mossad…. The Israeli Mossad's primary 'modus operandi' is to work through high level appointed and elected American Jews in the U.S. government. They also work through the 'U.S.A. Government Internship Program' to place personnel in key positions. Young bright and well educated American Jews are first indoctrinated, trained and then placed in key U.S. government agencies in order to carry out specific intelligence operations."

The original aztlan source even claims that Nick Berg was decapitated in Abu Gareib prison but that information was perhaps a bit too hard to swallow even for the most gullible journalist.

Yeah, I believe I believe!!, after the torture story came out and all the world turned its attention to this particular prison someone decided that staging a decapitation exactly at this spot would detract the attention from real American crimes. And we all know by now, no unwanted information comes out of this spot.

Wolfgang