Israeli prosecutors have told the ABC they are examining purported photos of Malka Leifer taken last week in a town in northern Israel.
Police want Malka Leifer returned to Melbourne, but for two years she has been fighting her extradition to Australia in the Israeli courts.
For the alleged victims of Ms Leifer's abuse, like 29-year-old Dassi Erlich, the surfacing of the photo has turned her world upside down.
Starting when she was 15, Ms Erlich said she endured years of sexual abuse at the hands of Ms Leifer, then principal of her ultra-orthodox Jewish girls' school in Melbourne.
"I was pretty shocked to see the photo. It really brought to focus the issue again and in a way that was quite re-traumatising," Ms Erlich said.
Eighteen months ago Ms Erlich received one of the largest sexual abuse damage payouts in Australia's history with the Victorian Supreme Court ordering the Adass Israel School pay her more than $1 million.
But Ms Leifer has not faced justice. Just hours after several students first raised allegations against the principle, she and her family left Australia on a plane to Israel and never came back.
Ms Leifer's lawyers argue she suffers panic attacks and is too ill to even attend court sessions.
Last year an Israeli judge ruled that extradition proceedings should halt while the former principal underwent a psychiatric treatment regime.
"I absolutely feel like the Israeli justice system is failing us. I absolutely feel very let down from the system," Ms Erlich said.
"I kind of just feel like she is playing the game and they are letting her play the game."
Calls for Australia to increase pressure on Israel
According to Ms Erlich, Ms Leifer was photographed last week by Australians who knew her while attending an ultra-orthodox religious festival attended by over 200,000 people in the town of Meron.
"Someone that has panic attacks would definitely not be going to somewhere like Meron on one of the busiest days of the year there," Ms Erlich said.
She said it is outrageous Ms Leifer claimed to be ill yet appeared to be enjoying herself, while her alleged victims wait for her to face justice in Melbourne.
When asked if Ms Leifer attended the festival, her lawyers did not deny it, saying it was "not a big deal" and that she was still undergoing treatment.
"We are examining the matter, including the question of whether it is Malka Leifer, and the implications that result from it," an Israeli Justice Ministry spokesperson said.
Ms Erlich is demanding Australian representatives in Israel increase pressure on Israeli authorities to ensure the extradition is carried out.
"Politically I don't see anything being done, I don't see Australia putting any pressure on Israel to make this happen" she said.
Australian-Israeli child abuse victims advocate, Manny Waks, said it was outrageous Ms Leifer remained in the community while she was wanted on such charges.
"It really is a very confronting sight to see someone like Malka Leifer, who's been accused of such horrendous crimes against so many alleged victims, going freely in Israel, potentially endangering more children today," Mr Waks said.
Australian officials have told PM they are increasingly frustrated with the lack of progress over the extradition and have asked for an explanation from the Israeli prosecutor's office.