Create new vault via sync, create new note on local device, paste a large image (3000x4000 px in my case from phone camera), delete the image as next step.
Go to Sync>Deleted Files>View, select file above to see version history, click on previous version and the full image is displayed.
BUG button to Restore this version is blocked from view by the image.
Did you follow the troubleshooting guide? [Y/N] YY
Obsidian version: v1.3.7
Installer version: v1.1.16
Operating system: Windows 7 Ultimate Service Pack 1 6.1.7601
Login status: logged in
Catalyst license: none
Insider build toggle: off
Live preview: on
Legacy editor: off
Base theme: dark
Community theme: none
Snippets enabled: 0
Restricted mode: on
Possible reason is the Electron installer used for win7 version, and not sure if this bug is applicable only to my environment.