The misinformation of localities is a common phenomenom. When newbies don't have birthplace information they substitute marriage locality, first census, first tax list etc.
That the Paddocks were in Kentucky in the 1780's but do you have source for earlier than that?
The picture of Sarah Little raises some questions. If Sarah Little was the first wife of William then why did he marry Elizabeth Windows/var in 1789? Did he divorce Sarah? Are there records of Sarah Little Paddock alive after William's marriage to Elizabeth?
I know of a similar instance of an alleged family member in a photo but he died before cameras were invented so it is obviously not him. Could it be the Sarah Little in the pic is not the same person as the Sarah Little who is thought to have married William Paddock?