Faded photo with texures problems

[Jhtisman]

Hello all. I'm new here and I hope that I can find some help.

I'm fairly handy with Photoshop, but this picture has me stumped. It has faded very badly and has cracked over time to create a problematic texture.

I've tried using levels, brightness/contrast, multiplicative layers and all of the simple tricks, but it continues to have poor contrast or discolored highlights/shadows.

Any suggestions you have would be greatly appreciated.

P.S. This is a picture of myself with my sister when she was 4 and I was 2 1/2. Two years later I lost my sister to spinal meningitis so this picture of her is one of the few I have. It's quite special to me.

EDIT:
I have added the best version I could get. My sister's dress is supposed to be pink.

[Mining Art]

Hi; I spent a little time with your photo. Changing the background would help a lot I think, here is a start with a blue screen. I was not sure of the colors for the clothes, so just took a guess.

[Cameraken]

Hi Jhtisman.

Welcome to retouch Pro

I started from the yellow channel (multiplied)
Layers to paint and Neat Image

I don't see much texture here. I do see lines in the shadows. This may be caused by the scanner. I removed them with the dust and scratches filter.

Ken.

[mistermonday]

The Blue channel is still in pretty good shape with reasonable tone and contrast. You could use it as the basis of a black & white image (attachment 1) which you can then colorize (attachment 2) or make a sepia or duotoned image. A copy of the final image can be selectively blurred with Dust & Scratches filter or one of the other blurring filters to remove the lines in the background and other areas where you do not need to preserve detail.
With some patience you should be able to get a pretty good restoration.
Regards, MM

[Jhtisman]

Thanks for all the suggestions and help!!

Here is the final (actually I will probably keep tinkering with it to get it just right) Version of my restored image that I used. It was the red channel that was messed up so I did some balancing and then dodging and burning. I copied the blue channel on top of the red to fill in the details of my sister's dress and then did the same to the background in the red and green channels to get a basically gray background. What I'm not happy with yet is the kind of random way I dealt with the cracks. But for now my mother is happy and I am enjoying this photo.
Thanks again for the help!!