The "where" seems very likely to simply be a local thumbnail cache being misused/uncleared when it should be cleared. The "why" question--why is it still not fixed? is more bizarre!
It's really two things that need to be solved, as I see it:
1. When a photo is deleted, it's thumbnail needs to NOT be retained anywhere!
2. Even if they fix that, all the OLD pre-fix thumbnails need to be purged so they can never re-appear months later they way they've been doing. Some kind of one-time corrective action. (Might even be a matter of re-synching your photos or something, rather than Apple writing code to execute one time and perform the clean-up.)
I just did some tests (using both a deleted screenshot and a deleted photo, and a couple transparent PNGs saved from Safari) on an iPad 2 running iOS 7.0.2, and can confirm the problem is NOT fixed.
But it acts differently now:
I no longer see the deleted photos showing through thumbnails in the main "big thumbnail" view (when you first enter the Photos app. Those, at least, are clean, unlike before.
BUT... if you select an image (transparent PNG) to view alone, look below it: the strip of mini-thumbnails at the bottom (or just one, if it's a single-image "moment") shows the same old problem.
And although this thumbnail is seen smaller, on a retina display it's still got plenty of useable detail--easily captured by taking a screenshot that can be sent anywhere and zoomed in. In fact the image is recognizable even on my non-retina iPad, expecially with a PNG with enough holes.
How recognizable is a problem? ANY retained image data that can be SO easily extracted is a problem. It's enough for an abusive spouse to see you saved a map to your divorce lawyer, or an employer to see you took a photo of the hospital where you're being treated, a dictatorship to see you were at a protest rally, or a secret stalker to know where your kids go to school. Having an (optional) passcode or TouchID doesn't make this unimportant: you might even HAND your iPad to someone to show them something. Doesn't mean you want them to have a 20-second method to see your deleted photos.
apple.com/feedback -- give them detail on what triggers this privacy flaw, and hope they start paying attention.
That did the trick (IFunBox) I went to the photo data folder and deleted what was in the "Caches" folder as well as what was in the "Thumbnails" folder (Backed them all up to my computer first. Even deleted the configuration file). My thumbnails didn't show up, so I re-booted the ipad (Hold down power and home button until it resets) BINGO!
I wanted to post this for people who may be looking for this in the future (Seems Apple neglects stuff like this)
I had a similar situation. I am into photo editing and like to use transparent images for such editing in other apps. When I finally find and save the transparent image (which isn't as easy as it used to be on ios6) it 'resurrects' an old photo I've deleted from a while ago and uses it as the 'base' for the transparent image. It's frustrating. Ios6 didn't do that to me. I understand that photo editing should be done on more appropriate software but I'm staying within budget of a high school soon-to-be college student. I don't know if there is an explanation or if there is maybe some way to fix it or even if they plan on fixing it. I am just really unhappy with it. My OCD kicks in.
I just encountered this problem on an iPhone 4S with iOS 7.0.4. I saved a transparent png to my camera roll and when I view the thumbnail for it, it has a long-deleted photo in the background. I'll add that it was particularly important for this photo to be gone, and it's upsetting to see that it somehow still existed somewhere.
Please fix this - it is a BAD security issue.
Wow! This is happening on both my iPad Air and my iPad Mini Retina. I am using Paper and whenever you try to save to camera roll (with background colour turned off in settings), you see a thumbnail of a previously deleted photo. When I click the photo to enlarge it, I see the picture for a second and then it goes black and the thumbnail appears at the bottom with the deleted photo as the background.
This is a SERIOUS glitch. Apple, please fix this!
I can bring back over 100 previously deleted photos Easley by useing a photo editing app adobe touch for instance creating a png and then duplicating it 6 times , then I export all 6 png pics I created numerous times and when I open the camera roll I can see all 100 thumb nails of deleted photos (or how ever many png's I've exported) I did this not to long ago just to see how many and I think the number was around 150, before the png's stopped showing deleted images they just started showing black backgrounds. This I noticed back on my iphone 3s and threw to my 5s.
Hey, I can confirm that this has been happening to me too, since only recently, though I've only very recently been importing images with transparent alphas (in my case it's happening with animated GIFs, so it's not a PNG-only issue but rather an issue related to how the photo album handles alphas in its thumbnails).
Also, in my case, it's both new and old photos being "resurrected" this way; some are probably 6+ months old, and some from about a week ago. My guess is that if I were to import more images with alphas, I'd see many more resurrections as so far every image with transparency has had a different, deleted photo placed as its backdrop in the thumbnail.
Another quirk to my case is that I've never synced my device to iTunes, ever. So the syncing process isn't where the problem occurs.
I'm using in iPhone 5, with iOS 7.0.4 (11B554a), and can replicate the issue at-will and, as far as I can tell, is impossible to avoid when viewing thumbnails of animated GIFs (and indeed probably all images with alpha transparency) in the photo album.
It goes without saying that this really is a huge potential security issue; people tend to delete photos they don't want to see again, haha.