How is this possible? Can anyone answer this...

The obvious answer is to ask the someone that sent this seemingly deleted message.

There is a huge 'human' factor in the story you've told, which is the most likely point of failure here. Someone thinking they deleted something but didn't, someone had physical access to the phone etc etc.

From a technology point of view the photo may have reached photostream, a stream someone else may have had access to but that wouldn't encompass the date/time/message details unless a screen shot had been taken. Were the phones jailbroken?

So many if's buts and maybes but, I'd suggest, the issue is unlikely to be 'hacking' is so much as someone getting remote access to the exchange between two devices in this case

Thanks Mrplow.

The phones are not jailbroken.

The person who got the SMS, may have had access to the phone for a limited period, but then they could have pulled other SMS's etc - which they did not - and I would have expected they would have pulled others if they had the ability too.

They got hold of the SMS weeks later and said it was sent to them by someone.

The facts are, the picture was taken, the SMS was sent via iMessage and both were then deleted from the phone.

I understand the whole "restore back-up" piece, but this was not done.

Can the extraction methods to pull SMS's either via iTunes or third party software work with iMessages or pure SMS's MMS's?

"sent to them by someone" -- sounds like you need to track "someone" down and ask them, doesn't it?

PS. Just as with computers, "delete" is not the same thing as "erase."

Never heard of that happening before that would suggest it was a human rather than a technical problem.