Ryall was cleared of 'simulation' at an FFA disciplinary committee hearing on Wednesday night after his tumble in the box earned a game-changing penalty in the heated 3-3 draw with Melbourne Victory at Allianz Stadium on Saturday.
"It was exactly what we expected," Arnold said on Thursday.
"Seb said that his heel was clipped and we believed him."
Ryall was heavily criticised in the wake of the incident, most notably by Victory winger .
But footage showed there had been some contact with Victory's Gui Finkler before Ryall went down.
"It's a pity because Seb has copped a fair bit of stick over it the last few days and had his reputation tarnished," said Arnold.
"Now everyone has to go back on what they've said because he was proved innocent."
The Sky Blues coach did however, say the way Ryall reacted after he fell in the 71st minute by clipping Finkler on the back of his head with his hand was unacceptable.
Team-mate Sasa Ognenovski copped a one-match ban in October for a slap to the back of then Western Sydney player Vitor Saba's head in a heated Sydney derby.
Arnold said he had seen enough tensions boil over in Sydney's last two matches against Perth and Victory and didn't want to see any more.
"Sasa got suspended for something similar. It's something that I don't like," he said.
"I had a harsh word to Seb about what he did after the penalty to Gui Finkler. I don't accept that.
"I haven't been happy the last two weeks in ourselves in Sydney FC, there's been too many melees in the games.
"It's something we've spoken about in the dressing room and I don't want to see it again.
"I want to see a good disciplined football team."
Ryall, who avoided a two-match suspension, will now be clear to play against Arnold's former team Central Coast Mariners at Allianz Stadium on Saturday.
Arnold says he'll have to decide whether to keep Ryall in the centre of defence with first-choice centre backs Nikola Petkovic and Jacques Faty both back from suspension.
