One source has this illustration as being the earliest Arabian Nights illustration but this copy is from a 1729 edition of Galland’s Mille et Une Nuit. The illustration is by David Coster, a Dutch engraver. It is was included in a pirated version of Galland’s Mille et Une Nuit. The earliest editions of Galland were not illustrated. The similarities of this illustration to the 1707 Bell illustration are striking. The setting, location of the actors, even the hand gesture that the Sultan is making and that Shahrázád is making have been reproduced. I would contend that this is a copy of the earlier 1707 Bell illustration. The female figures are much more feminine appearing but also more western as they wear dresses with plenty of cleavage showing. I very much doubt that the Arabs of the time depicted slept in four-poster canopied beds.
Interestingly, what Coster has added is the surrounding panels. They illustrate scenes from some of the stories Shahrázád is telling. Clockwise from the top right panel we have: “The Third Kalandar’s Tale,” “The Tale of the Grecian King and the Physician Douban,” “The Merchant and the Genie,” “The Fisherman and the Genie,” and “The Porter and the Three Ladies of Baghdad.” All of the tales, except “The Third Kalandar’s Tale” appear in volume 1. “The Third Kalandar’s Tale” is a nested tale, part of “The Porter and the Three Ladies of Baghdad”. That frame story is broken between 2 volumes. “The Third Kalandar’s Tale” is in volume 2.
The central panel, showing the frame story of Shahrázád, has all of the elements that will typically be seen in depictions of the frame story: the sultan Shahryar, Shahrázád, and Dunyázád. They are usually arranged around some sort of couch or bed, and, despite what the frame story says, Shahrázád is inevitably shown as telling her story to Shahryar instead of Dunyázád. Some sort of Eastern or “Oriental” decorations, objects, scenes will be present to give the scene an exotic look. It was not until the mid-1800’s that artists actually began accurately depicting what an Arab household bedchamber could look like.
 Irwin, Robert. Visions of the Jinn. Geneva: Arcadian Library, 2010, p.
 Marzolph, Ulrich & Richard van Leeuwen. The Arabian Nights Encyclopedia. Santa Barbara: ABC-CLIO, 2004. Vol. 1, p. 30.
 For more information on the 1707 Bell illustration, see the following post.