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Lawdog,
As for the bag of medals, the Bundesarchiv can provide you with a listing of all medals credited to an individual. You also have the right to request any medals that were issued to be reissued to you by the German Government. YES they do do this as I have a great uncle who served in the Luftwaffe Artillerie, he was taken as a POW after the war for a brief period of time and during that time stripped of all his medals. Because this was common directly after the war, you do have the right as an immediate relative to request the reissuing of the medals and documentation associated with the medals. There is a cost to this and quite a lengthy wait but it can be done. My great uncle recieved his Iron Cross first class as well as his Anti-Aircraft badge back and this was done about 15 years ago.
As for your picture, you cannot tell anything from the picture other than the type of uniform the individual is wearing. To guess as to where this individual served, what unit he belonged to and so on would be just that, a COMPLETE guess. I suggest you do contact the Bundesarchiv and start there as this would be the most appropriate first step to take in researching a individuals military record. Good luck and don't give up. It can be a frustrating task, trust me, I have been researching my family history for 20 years now.
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