Can I take a picture that I am sure is copy written (Cera from Land Before Time) to a cake shop and have an edible image made if the cake is going to be for my granddaughter - I wont be making any profit from it so is it still copy written?

Yes it's copywritten so the official answer is no you can't do it. I don't think the image police are going to be at your granddaughter's bday however, so if the bakery will make it for you (make sure to photo shop out any copyright marks) go ahead

The bakery most likely won't do it as they would be breaking copywright law by making the edible image.

All my local Safeways will do anything as long as it doesn't have a copyright mark on it. You know and I know and they probably know too but are just playing ignorant. I, for one, am glad they do