In short, this image, along with the early versions known as prettyFACE or White powder (https://ibb.co/hH0HNnh), was used to scare people in Japanese websites such as Futaba, 2channel, among others, but its origins aren't 100% confirmed and the original, unedited picture of this person remains lost.
People who has reposted these edits back in the 2000s were contacted, and they confirmed the original picture came from a webcam video displaying an unattractive Asian woman, but the original image and identity of this woman is yet to be found. It is said the original video/picture is way more horrific.
There's actually a subreddit and Discord server out there about investigating the image's origins. Discuss if you're interested
this isn't any help at all (maybe my memory's just entirely failing me) but i swear i watched a video on this topic and the creator of the original image came forward and said they just used some halloween mask and photoshopped the image to hell and back .. maybe it's just my imagination.
vocalsynths and lost media is my passion tsurugikinjou on discord
I know that there is a guy called Killerjeff on Newgrounds who claims to be the person in the picture. But I don't think it's true, I have checked out his story and there are lots of contradictions to his claim. For one, he originally said it was a mask, when clearly it is a photoshopped composite. Then he changed his story and said there were two versions, one that was photoshopped and one that was the mask. But every time he is asked for proof he comes up with somae excuse why he can't show it. I think it's possible he may be the first person who came up with the name " Jeff the Killer", though, as his post on the Newgrounds BBS seems to be the earliest mention of that name that has been found, so far.
I remember there was also some Japanese guy on Twitter who claimed to be the person who originally photoshopped the face in the image. He said the original image was a still from a "scary video" where a "pale middle-aged woman" suddenly popped up into the frame. He said that it was a popular scary video that was shared around on Japanese message boards.
Well, that was all the information that was found that I last heard of. Have there been any new developments?