I've never run into this exact problem but if a client sends me a logo from another company I email them back asking if they have written permission to use said logo in their marketing. If they say yes then that is sufficient for me. To word it nicely I go with something along the lines of:
I see you'd like Acme Co.'s logo included in your artwork, do you have any sort of authorization from them to include it? Just as I wouldn't include your company's logo in someone else's artwork without checking with you first, I have to do the same for them.
Since this is more about a copyright image off of Google I would probably take a similar approach.
I remember seeing this artwork back when it was published in such and such (or when it won such and such award). I'm not familiar with it being released under a royalty-free license though. Do you know the artist or something.
Then when they reply they don't, follow up with more legalese.
If you don't know them then do you have the rights to use it, otherwise its? Otherwise it's in mine, and really your best interest not to.
If they persist after that point:
I'm sorry but I cannot knowingly help you commit copyright infringement. It goes against everything I stand for as a designer. If you can get permission to use it then I'm happy to proceed, or if you want to use a different image that is royalty-free.