I don't think that she does realize that he's a murderer when she marries him. Remember, Kay knew the same Michael that we did at the beginning of the film. At that time, he was doing everything he could to distance himself from the family. She really doesn't see him after his "transformation" on the night of his first encounter with McCluskey. He went into hiding because of the crime he was "wrongfully accused of". As an outsider, Kay probably truly believes that. She has no understanding of the subtleties of that explanation.

The next time she sees him, she is older, single, and living at home again. He assures her that, although he has joined his father, he will make the family different, legitimate. She believes him, because that is the nice, college boy that she fell in love with. She buys into it, probably because he professes his love for her and his vision for their future, which is just what she wants to hear.

Remember, she had no closure with Michael. He was taken away from her when she least expected it. Although Michael has changed, her love for him hasn't, because it was given that chance. He reappears in her life, tells her that he still loves her, and, because she still loves him, she goes along for the ride. It isn't until the scene with Connie that she begins to understand what kind of man she has married.