Hi,
I know you have scanned at 300dpi but you also compressed the photo to make it smaller in kb size, thus reducing the quality. Is it possible to rescan at 300dpi and not compress or reduce the quality setting and post it as is. If it comes up at more than 500kb in size please pm me, I will reduce it for you without losing quality.
It will be worth taking the extra trouble as I'm sure it will be easier to restore and give you a good copy.
thanks
Jenny