I personally think the picture is a young Snow White. Click to reveal:
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). 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.
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"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