Go ahead and use your design. Elf images are everywhere, just like Ohio Star quilt, or whatever block design you can imagine that are "out there" in the public for hundreds of years....just like an elf image. You have designed your own.
USE IT WITHOUT FEAR.

If we all found a picture of a recipe, bought all the ingredients, made it look exactly like in the posted picture, are we supposed to just stand there and look at the gooey, chocolately creation, or are we allowed to eat it too.
How far would you have to go to prove it was someone else's idea? Go ahead and create your elf.

Elves are ubiquitous. It would have to be extremely unusual to fall under any copyright protection after you have made significant changes. However, if it still looks a whole lot like a specific, recognizable elf, say from a movie or children's book, then you'd need to be careful, but seriously, think about some of the elves that are commonly seen. Is the Elf on the Shelf recognizably different from elves we used to see on Christmas ornaments and cards in the 1950's? I don't see how! Is there a significant difference between him and say, a Keebler elf for that matter? Maybe Keebler needs to sue whoever came up with Elf on the Shelf? How about Snap, Crackle and Pop? Google "elf" images and see if there's anything that makes yours seem too much like some other and then be sure to change that. They seem to be a very standard cultural icon. You wouldn't worry about duplicating someone else's work if you were creating a Santa figure, and he's just another kind of elf, imo. (I'm not a lawyer.)