Help restoring photo with PSP7?

Here's the damaged photo, there it is after a few thousand clicks of the clone brush. Now I'm stumped: how to correct the discolored area, for example on the grafitti wall just behind Jimbo's grave?

I'm going to have to look at this again tomorrow, but since there is so much discoloration, what about desaturating the whole thing, then coloring by hand (I know, I know) with each section (outfit, cat, bottle, table, grave, etc) on its own layer? Otherwise, go into selective colors and play around with the magenta and reds, especially. I think this might be too far gone for that, though

Otherwise, go into selective colors and play around with the magenta and reds, especially. I think this might be too far gone for that, though

I tried doing this but it didn't work. I think I would do it in a grayscale and then maybe just sepia. It's really a lovely pic and I wouldn't want to lose it either but I'd be happy to have in bw.

Thanks for the comments, very much appreciated! Here's some progress. I went to Colors -> Split Channel -> Split to RGB and then selected the Red image, voila. For the second version I went to Colors -> Histogram Functions -> Stretch and this brought back a lot of the lost contrast, making the lettering on Jimbo's headstone more legible, etc.

Beter B&W than nothing! But I still think that the restoration of the color photo is an interesting (and, for me, difficult) challenge... Maybe something could be done with masks and layers? There's a lot of PSP7 that I don't have a clue about...

Already looks better, just bump the highlights a bit.

bump the highlights a bit.

What would be a good way of doing that? If I increase the contrast, the stain starts to come back... Of course, I can now go to work with the clone brush on the B&W version...
After that I'll attempt to colorize it.

Instead of using the contrast tool, try levels. In levels you can adjust shadows, midtones and highlights independently, which gives you way more control.

I quickly (disclaimer if it sucks) played around with the photo in levels, then went in with the dodge tool and lightened up some of the parts that were distracting, like shadows near the cat and behind the bottles. I then burned in the cat a bit, and the rest of the stars of the image like you (your arm was a bit light) and the bottles a tad. At the end I added a very faint sepia tone and faux old frame, which I think are a little cheesy, but I figured what the hell.

With a little bit of effort, well a lot maybe, you could make the gravestone more readable and the rest of the image pop by painting in highlights and shadows where needed. Not sure how much time you want to spend working this photo, though.

I like it! Yes, I want to have the gravestone and the grafitti on the wall be more sharply defined. There isn't a lot to work with... as far as time spent, I'm laid off work at the production co. (There's never anything muuch going on this time of the year), I'm "between" studios, and I have a broken ankle. Time to fool around with stuff like this is about all I've got.

Well I loved the guy so here's my attempt and is that you in the pic?

Yours definitely pops better, Sunny, I like it.