Harbinson, 46 and from Stoneyford in Co Antrim, is serving a three-and-a-half year sentence at HMP Magilligan for sexually abusing a 13-year-old girl whose topless pictures were found on his phone.
The former Orangeman, who came to prominence during the Drumcree marching protest, was jailed in May 2011 - after his trial heard how he spent months grooming the victim.
More than 1,700 text messages were sent between Harbinson and the schoolgirl.
He was convicted of molesting the teenager and possessing the indecent images, but acquitted of separate indecent assault charges. The jury failed to reach a verdict on further alleged offences.
Harbinson later launched judicial review proceedings over action taken against him for refusing to remove a poppy after the designated period.
But the High Court heard on Wednesday that the case has now been resolved.
"He received an order to remove it (the poppy), wouldn't comply with it, and was adjudicated accordingly," a barrister for HMP Magilligan told Mr Justice Treacy.
"The Prison Service are prepared to cancel the adjudication, to alter their records to reflect the fact that the adjudication has been cancelled, and will undertake to reconsider the poppy-wearing policy within HMP Magilligan."
On that basis, the judge agreed to dismiss the case and award costs in favour of Harbinson.
"It seems a fairly comprehensive victory," he added.