"I went back that night and I went back at six o'clock (the following morning)," she said.
The photograph was unique, taken and hand-coloured by Nelson photographer Ellis Dudgeon.
Mrs Scarlett said she wished she had never removed it from the wall.
"The ladies all helped look and I thought 'oh, some hooligan's got it and scribbled all over it and thrown it away'."
She even reported the missing photograph to police.
Mrs Scarlett had replaced the missing photo with a black and white version and over the years had given up hope of finding it.
Smiling yesterday, she described the news of its return as "lovely".