From the liner notes of the Salisbury LP: "Lady in Black, written early in November in Bradford, was inspired by the vision of an unknown girl"
In Cheltenham, England, about twenty People saw a mysterious "Lady In Black" in the years 1882 to 1889. In Texas a story is told, that the lady in black was the wife of a rich man from Spain that was hung one day. Since that day, her ghost visits the area near Highway 281 in Alice, Texas. Many drivers reported that they have seen a mysterious woman, a lady in black.
Suggestion credit: David - Berlin, Germany, for above 2
According to Sweden Rock Magazine #16, the guitar parts of the song were so simple, two of the recording's four acoustic guitars were played by roadies.