I posted this in the episode 17 thread, but it’s relevant here. I think the picture from the book is a young Snow White. 
Look closely at the shape of her face and her white ribbon. The picture from the book is identical to the photo of the young Snow White (episode 18). Also, the fact that she is holding a heart locket makes me think it belonged to Regina, a gift given to her by her true love, the Stable Boy, Daniel. Finally, I think the reason Henry had a funny look on his face at the start of episode 17 is because this may have been the first time he came across the story. I think this was one of the stories August added to the book: how young Snow White caused the Evil Queen pain. That is why Henry was curious to discover it.
"That’s how you know you’ve really got a home. When you leave it, there’s this feeling that you can’t shake. You just miss it." Neal Cassidy