Fix badly exposed part of old original photo

Yeah, I think B&W is your best bet here. The green channel works for the flare area; the red channel for the reasonably intact part to the right.

This is a big challenge! Here are a couple of approaches, my results aren’t perfect, but if you spend more time on it than I did you might get further. For example, I would even out the background tones more, removing the halos around the left two people.

First stage: Apply Filter > Camera Raw Filter, and combine its advanced color controls with its nondestructive parametric/AI masks. I used many masks to target the areas affected differently by the fact that the light leak has a highly irregular shape and intensity. The masks use various combinations of Temperature, Tint, Point Color, Dehaze, and Clarity adjustments, whatever is appropriate for a certain area. Mask types used were Radial, Linear, Color Range, People, and Object depending on what needed isolating.

The light leak was most reduced by applying masked Temperature and Tint adjustments, and then adding Point Color samples for fine-tuning. Adding Dehaze and Highlights adjustments to a mask helps recover details in the light leak areas.

Second stage: Take the results of the above, maybe desaturate it, and run it through the Colorize neural filter (Filter > Neural Filters), applying manual color overrides. (Or, you could recolor the image manually using traditional Photoshop non-AI painting technique, painting on layers with the Color layer blending mode applied.)

And of course, if there isn’t a single approach that fixes everything, you can make different versions and use Photoshop layer masks to blend together the best parts of each.

Forget the neural filters. First color-correct the orange areas, then try a black to white gradient set to Soft Light blending to even out the exposure. This should get you somewhere close.

Honestly - the flare is so bad even trying to use AI to adjust didnt get great results. What I would do in this case is start with a converted Black and White image and then hand color if you want. That way you can focus on adjusting the overexposure and then removing the flare altogether.