For circumstances/situations like that, you should be able to file for a new title in whatever state you reside. Contact your local DMV for more information.
Mine was actually a Texas car, but it had been out of the system so long, and the previous owner lost the title and disappeared after I bought it, so I had to run through the whole 'apply for a new title because the car doesn't exist in Texas' process through the Texas DMV. It's not too horrible, but you'll definitely want to make sure you have your bill of sale notarized, as well as get the car inspected by someone the DMV trusts (like someone from the Sheriff's Dept Motor Vehicle Inspection Office) to verify the VIN and other things are in order. I went through the regional DMV Special Titles Office, and the person there was extremely helpful.
Regardless, as Scott says, this is gotta be a scam - using someone else's pics from Craigslist is just wrong.