There are a lot people out there who are wondering how to restore artwork on old machines. The advantage of these old machines is that the decorations are usually relatively simple. They use a limited number of colors and the colors most of the times are solid.
Your best choice is vectorizing the artwork.

Why to use vector software:
This makes it possible to scale the image without losing quality.
You can use layers for different parts of your drawing so you can hide or lock stuff you aren't working on .
You can keep tweaking till it's just right.

The software I prefer is Adobe Illustrator, but as this is extremely expensive I looked for a good alternative. Then I stumbled across Inkscape. A free and open source project.
The look isn't as professional but the feel is the same.
If you are used to working with Illustrator you can easily make the switch. If you have to start learning vectorizing this program is a blessing. All icons have self explanatory look, and if you hover over them you get a nice info box (you can chose from alot of laguages on there site). All stuff I use for vectorizing artwork are right there.
If you save your work as .EPS or .PDF you van take the file to your local print shop for professional printing.
The software can be found here:

http://www.inkscape.org/

Maybe we can use this topic to exchange tips and tricks about vectorizing.

That's why we do manual vectorization. This gives you full control over the finished result. There are a lot of auto trace options out there, I've tried most of them but didn't find any useful. They all need quite some tweaking in the settings before the auto trace, and you have to clean up the result afterwards. And if you get a good result with the software without any fiddling, the bitmap most likely was done faster by hand if you got some experience.

I just made a short video of some simple vectorization.
The cabinet of my Camelot is painted over so I have to re create the artwork. I found a small picture online which I straightened in Photoshop with the perspective crop tool.
This I now use in inkscape as a template.
I'm sure this isn't the only way to do this, and probably not the best or fastest way either. But it gives an idea of what you can do.

Enjoy your movie

Illustrator originates from an apple environment. There they use the keyboard a lot more then we do on windows. If I have to use the macs in my brothers print shop, I'm always looking for the right an middle mouse button!
If I see the full time designer do his job there, he always has one hand on the keyboard. He does things at lightning speed without having to move his mouse all over the screen. This way he doesn't have to have that many icons on the screen which clutter up the workspace.

This video is an example of how you can convert an bad image into a vector file.
The file size is significantly smaller, especially if you have a full size image of a cabinet. If you like to keep control over your colors, you need to use TIFF as a file type which is very large. JPEG never keeps the lines as crisp and the colors are converted.
for the example: File size
inkscape .SVG: 10kB
photoshop .TIFF: 122 MB (at 200 dpi)

If you are planning on screen printing you need to make vector files or make layers for each color.
Also if you like to plotter cut spray templates you need to use vector files.

Sometimes I also use bitmap software like photoshop for minor repairs or if it's a more photorealistic image. Just use what is best for the purpose.

Nice job, for laser cutting you definitely need vector files. In my laser shop we use .dxf files. Which is also supported by Inkscape. There I aslo use coreldraw for editing some files, the main files are made in solidworks by the guys of engineering.

For the record, an example video of the perspective crop tool in Photoshop.

Again, I don't claim this to be the only, best or even the fastest way to do this. Its just an example of how I did it in this case.

The video:

found this software just yesterday, just for making these instruction videos. I tried several others, but this one did the best job.