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Any idea how the plane was lost?
Yes. From the Missing Air Crew Report. I was able to find the complete 30+ page report.
Aircraft B-17G with serial number 42-38069, nickname Big Widget, departed from Amendola, Italy on a combat mission to Odertal Oil Refinery in Germany.
Statement from S/Sgt Charles H. Hill, tail gunner on B-17 no. 395. "After we left the target, B-17 no. 069 lagged behind us (supposedly due to flak damage). Our element was separated from the squadron at the time. I heard over the interphone that they were going to throw out all extra equipment and salvo the ball turret. A few minutes later I saw one chute go out, then three FW-190 attacked no. 069. Four chutes came out then, one after the other. The plane flew on behind us for some time until I lost sight of it. This was at 1315 hours from 19000 feet at 46 deg 25 min North 17 deg 10 min East. S/Sgt Willet didn’t bail out. He was killed by shrapnel from 20mm in the forehead at the tail position. The aircraft crashed in Hungary."
Most of the nose section of the aircraft was destroyed by enemy fire before crashing. 8 crewmen (my wife's grandfather included) became POWs. 2 crewmen were KIA, one in the aircraft, the other when his chute failed to open.
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You should be able to find the Missing Air Crew Report, that will everything even down to the .50 cal ss#s.
I did. It provided lots of info. The piece I am still missing though is markings. It seems this aircraft wasn't photographed hardly at all. I think I may have enough to piece it together as a best guess, but still nothing on possible nose art.