The photograph is actually one that was taken in 1933 and is known as "The Surgeon's Photo". It is a well documented fraud.
For years skeptics were sure that the photo was somehow a hoax. But no rigorous studies of the image were conducted until 1984 when Stewart Campbell analyzed the photo in a 1984 article in the British Journal of Photography. Campbell concluded that the object in the water could only have been two or three feet long, at most, and that it probably was an otter or a marine bird. He suggested that it was likely that Wilson knew this to be the case. But as it turned out, Campbell was wrong. The object in the water was not a form of marine life. It was a toy submarine outfitted with a sea-serpent head. This was revealed in 1994 when Christian Spurling, before his death at the age of 90, confessed to his involvement in a plot involving both Wetherell and Colonel Wilson to create the famous 'Surgeon's Photo.'
According to Spurling, he had been approached by Wetherell (his stepfather) who wanted him to make a convincing serpent model. The model was then taken to Loch Ness, photographed, and the pictures were given to Wilson, whom Wetherell felt would be a creditable front man, since he was a surgeon. Apparently Wetherell's motive for concocting the elaborate plot was revenge, since he was still smarting from his humiliation over the hippo-foot tracks. "We'll give them their monster," his son later remembered him saying.
Ours was at least more creative. (The link to the AP photo is provided, but it will almost certainly be memory holed in a very short time. Hence the screen shot.
UPDATE: Wretchard at the Belmont Club posted this absolute gem from YouTube. I'm cheerfully ripping it off – it's too good not to share. (But you should go over and read his post which makes a very good point.)