They can wipe out the arrest record. They do it all the time when they arrest the wrong person.
Unfortunately, it doesn't always work.
I have a friend that had a false arrest warrant dogging him for years. Every time he got stopped for a traffic violation, he risked being arrested and detained.
He had gone through the legal process to have it removed, but as I said earlier, it's like "whack-a-mole": it always popped back up.
NCIC doesn't seem to have the ability to reliably remove information. It's like Hotel California: you can check out anytime you like, but you can never leave.
“They can wipe out the arrest record. They do it all the time when they arrest the wrong person.”
Not really. In Colorado, records cannot be expunged by law, they can only be sealed, but people must still report the arrest when asked on government forms.