I could make an album of pictures of my nieces and nephews right now. It would take less than 15 minutes--deciding which pictures to include would take the majority of that time.
So I can see this couple deciding to make the album, choosing the pictures and realizing that there are no pictures of SGM with the baby. They think about it, and decide that since SGM has chosen to delete all the pictures they have ever taken of her with the baby, that she probably won't care if there are no pictures of her with the baby in the album, and just moving on to finish the project. No time, really, for contacting the SGM and asking for special pictures to be taken. The whole thing, from idea to execution, could have taken less than an hour.
At least, that would be my thought process. That SGM was so picky about her pictures, and since the album was going to several people, not just SGM and GF, that she probably wouldn't want her picture in the album anyway, because so many people could potentially see her pictures, and since there were some pictures of the baby with his/her grandfather, that should be enough to keep that set of grandparents happy.
When the step-grandmother complained, I'd explain my thinking, express my sorrow that her feelings were hurt, tell her it was not intentional, and promise to take more pictures of her with the baby in the future, in case I made another album.
And then I'd expect the issue to die out. If either SGM or GF continued to bring the subject up, I'd get annoyed. SGM made her bed, by deleting all her pictures. She doesn't get to guilt trip me for the consequences of her own actions. I'd defend my actions once, "Since SGM deletes every picture I've taken of her with the baby, it is a logical conclusion that she does not want anyone to have or see such a picture," and then I'd drop the subject. And refuse to engage any further discussion about it.
I really don't think the parents of the baby did anything wrong. All the SGM's actions would have led them to think that the SGM didn't want any pictures of her with the baby, and certainly, if she was that camera shy, would not want her picture in an album that was given to a number of other people. I think the SGM and GF are more in the wrong by pursuing the issue and not letting it drop, once they heard the couple's explanation.