Mr Musk and his company had raised free speech and jurisdictional concerns over orders from Australia's internet cop to remove footage about the April 15 incident.
The "graphic and violent" footage was instead geo-blocked to Australian audiences, the eSafety Commissioner complained to the Federal Court on Monday night.
Calls have grown for harsher sanctions for social media platforms after distressing footage spread online of the church attack and a mass-casualty stabbing in a Bondi shopping centre days earlier.
X over the weekend said it had complied with removal orders but argued against their global nature, saying the eSafety Commissioner had no such authority.
The matter landed in the Federal Court on Monday evening after the commissioner made an urgent application to suppress the footage on specific URLs.
The fact the content could be accessed by an Australian user via an overseas-based virtual private network showed it had not been removed, the commissioner's lawyer Christopher Tran told the court.
"They could have done more," he said.
It was unclear to observers which particular video was the target of the commissioner's application.
But Mr Tran described it as "graphic and violent" and capable of causing "irreparable harm" if it continued to circulate.
Footage of a boy repeatedly stabbing Bishop Mar Mari Emmanuel last Monday could still be easily found on X on Monday evening.
The court agreed to an interim suppression that shields the material from all users, pending a further hearing on Wednesday.
A barrister for X had asked the court to postpone the hearing without order.
Given the last-minute application and the time difference to San Francisco, where X is based, Marcus Hoyne said he needed time to seek "sensible and proper instructions".
Granting the order would affect international users "in circumstances where it has no impact on Australia," he said.
Meanwhile, Mr Musk used his platform, formerly known as Twitter, to try to turn Prime Minister Anthony Albanese's criticism of X's lack of response to Australia's request to take down the videos into a free speech victory.
"I'd like to take a moment to thank the PM for informing the public that this platform is the only truthful one," he tweeted.
He was responding to Mr Albanese's remark on Tuesday that "by and large, people responded appropriately to the calls by the eSafety Commissioner. X chose not to."
