In the long run, it's best not to work from poor reference material, but on rare occasions, you might want to do a painting or drawing from an old photo which is the only known existing reference of an image long gone. Here's such an example:
This old barn fell and disappeared long ago. The only known photo reference is an old faded slide from which I tried to pull a digital photo.
The first thing I needed to do was to discern whether the photo has any information about the light source and I see that it does. If I squint, I can see a clear pattern of dark created by the cast shadows on the barn, shadows in the background trees, fence posts and foreground weeds.
The next step is to do a drawing where these elements form the initial structure, then see where it will take me. Here's the drawing I came up with:
What I noticed while doing the sketch was an opportunity to push lost edges and light/dark contrasts. The darks behind the barn pretty much define it, then the light in the sky merges right into the roof just as the light on the pasture merges into the lower front. The shadow on the side of the barn defines the bushes and the fence forms an area of interest that pulls us into the drawing.
So with this old deficient photo, there's information to work with, enough to create a drawing, but I don't want to agonize over a painting with no color references.
So, unless you want to suffer, it's wise to avoid bad reference information that has no structure at all. Life offers enough challenges without our jumping head first into another one we know can be avoided.