After a 7 year gap good to see this topic raised again and now being able to add pictures easily really helps.
The xkdata webmaster states clearly that posting anything on their website does not constitute proof of ownership. They cannot possibly rule on ownership.
The xkdata website is not the place to dispute ownership of cars.
Nor is this forum.
All I can add in a constructive sense is to say that I have lived all my life in Illinois, and that your 1960 Illinois title appears to me to be legitimate, although I am not a legal expert. That is the way Illinois printed titles in the 1960s, sort of like a photo negative. I have one dated 1969 that is a little better and not a negative but a similar process. The purchaser would fill out a paper license/title form which had a carbon paper and a card stock form under it. The state would photocopy it to create the title deed, keep the original paper, and use the card stock form as the mailing address label to mail back the title and license plates.
It appears that Fredric Zapp bought the car in 1960 on a lien from Qualified Investment, who would have kept the title, and when he paid off the loan in 1962, they stamped his title and sent it to him.
What a pity your dad never transferred the title to his own name. That might have helped.