It sounds like you are missing two major parts of story development: Character and Stakes. These two topics could fill two small books, so I'll try to give you the run-down below.
The purpose of Character Development is to get the reader to care about the protagonist. If the reader doesn't care about who he's reading, what's stopping him from closing the book?
The purpose of Stakes is to increase the worth of the main conflict not only to the character, but to the reader. Keep in mind that all the development you do is for the reader. You aren't trying to make a better story, get that out of your head right away. You're trying to make a better story for the reader, so that he will keep reading. With that in mind:
The first step in developing your main character is giving him strength. This strength is usually a quality - discard any ideas of increasing his worth by giving him family members, that's preposterous. This quality can be anything, as long as it is something the reader could hope to attain. Honesty, loyalty, tenacity, kindness... the list is endless. It could also just be a 'little' thing, like loving a daughter or sibling. As long as the reader feels the heart-felt tenderness of that love, it works. Essentially, strength gives the reader a reason to root for the protagonist.
The next part of character development is inner conflict. You want your character to be realistic, and in this case that means he needs an element of inner turmoil. Without this, he comes across as too sure of himself. He needs to doubt.
I like to think of inner conflict as something that pulls the protagonist in two opposite directions at the same time, usually surfacing as a battle between what is needed and what is desired. However, it can also surface as a battle between two needs, neither of which are desired. (Having it surface as a battle between two desires, neither of which are needed, generally doesn't work so well.) For example, the protagonist may need to make a choice between two unpleasant choices. Or he may need to make a choice between keeping what he loves and doing what is right. Or a choice between honoring his code or doing what is needed.
Inner Conflict is almost always strongest when one of the choices is linked to the main goal, and the other side is linked to not completing it. In your example, the protagonist could easily want to leave the small town, but something is holding him back (feeling of duty to root out the killer, feeling of protection to someone he loves who won't leave, etc.)
There are two kinds of stakes: public and private. A stake is what could be lost if the protagonist fails in whatever it is he is trying to do. A private stake is what the hero would lose. A public stake is what the world of the novel (in this case, likely your isolated town) would lose. You need a combination of high public stakes and deep personal stakes to make this work.
High public stakes are easy to invent. The world will end! We'll all die! What you need to focus on is how those things come about. You need to be detailed just enough so that the reader feels it is real. This doesn't mean you throw a bunch of medical terms at him to explain how a plague works. It means you know how the plague works, and then use just a few terms to give your reader the sense that this is real. If you know how something works, you won't need to explain it: it will show in your writing. Details are the key to public stakes.
Deep personal/private stakes concern your characters, and what they would lose if the protagonist fails. You can determine when your personal stakes are deep enough by asking yourself the question: If my hero doesn't (insert goal here), then what would he lose? What would be lost? A job? Security? A life? Do NOT fall back on putting your protagonist's life at threat. Once, it was enough, but no longer, not with people on TV running for their life half a million times a day. You have to put something deeper at risk: you have to threaten the protagonist's very being.
Remember when I talked about strength? Put that at risk. If the hero's strength is an inherent part of who he is, you are no longer simply threatening to destroy his life. You are threatening to destroy him, and the very reason the reader cares about him. That makes your reader heavily invested in your novel.
Another way to do this is to give your hero a code or belief that he adheres to. This code doesn't even have to be right or moral. It can be as twisted as you want, but the hero has to believe in and adhere to it. If this is the case, you can put that at risk. Maybe the killer is after the hero, and to defeat him, the hero will have to do things his code forbids. Boom! Strength, inner conflict, and personal stakes in one line. In this example, the hero's code would take the place of strength (as long as it is a moral code). Not that adding additional strength is a bad idea.
A great example of threatening the hero's essence like this are the Perry Mason novels. With each case, Perry Mason feels that his client is innocent, and sticks to that belief no matter what.
These two things: stakes and character development, will, I believe, give your story the life it's been missing.