I'm confused. I guess Sister Jude or anyone else at Briarcliff doesn't know Arden's real background. For her to confirm it, she would have to see a tattoo on Arden's upper arm. BUT ... When they showed the newspaper clippings of Arden in Nazi Germany, I assumed it was someone else at Briarcliff (not "Anne Frank").
That photo belonged to "Anne Frank," who had been obsessed with the Holocaust and pinned up dozens of photos and clippings on the wall at her house. Presumably, that's why (in her delusion) she recognized Arden, even as she claimed to have met him at Auschwitz.
But, as far as her husband and the rest of the world was concerned, her freaky collection of Holocaust articles was just a symptom of her mental illness. It was all being thrown out after she was "cured."
Nobody else examined her "evidence" because they thought it was just a crazy conspiracy theory cooked up by a deranged woman who thought she was Anne Frank for Pete's sake!
You know, in a way, Anne's story is kind of the flip side of Kit's.
Kit is sane, but nobody believes him because his wild story about aliens is too crazy to be believed.
"Anne" was right about Arden, but nobody believed her, because she really was insane.