Lame_Wolf - 9:49 pm on Nov 14, 2012 (gmt 0)

I am afraid there could be more pics like this on user generated content.

That's the risk you take when allowing others to produce content for you.

I will delete the culprit picture and do a manual review of the subdomain also but to be on the SAFE side what should I do?

Don't just check of adult content, but also copyrighted work too.
Personally, I wouldn't have Adsense on UGC. At best, I would only add it to pages once I know that no violations are broken, and nothing else could be added to the page without me saying so.