Good questions. I will answer them from the perspective of a friend across the Great Pond. This may be viewed differently there, but somehow I doubt it.
What happens if...
1. Stolen camera is sold in the grey market.
Vendor is dealing in stolen goods. Not a good position for the vendor to be in when legal action begins.
2. An innocent buyer buys it, uploads the photograph on the net.
It's a risk. We need to verify the integrity of the products we buy and the sellers with whom we trade. In my locality, stolen goods have to be returned to their rightful owner, regardless of downstream losses incurred while dealing in stolen goods.
3. Autoprism/ Autoprism's friend finds the photographer through stolencamerafinder.com/
He can request the return of his camera, as it is his camera. He can threaten legal action if the holder of his camera refuses to return it. The rightful owner needs to be able to prove that the camera is his. Receipts and police report of stolen equipment with serial numbers come to mind.
4. The photographer acknowledges the serial no, but should he give it back and lose his money.
Huh? If we pay for stolen goods, are the goods no longer the property of the person from whom they were stolen? The law here does not say that the ownership transfers with the theft, even when bought by an unsuspecting victim along the way.
I am sure not, neither will the shop keeper return the camera. Then what?
That's when the police should be called in. Those dealing in stolen goods would find the police in my neighborhood totally unsympathetic with those selling and buying stolen goods.
I cannot say how it is there, but I would be surprised if it is much different in India.