To accomplish putting a system on, boot from your system DVD by inserting the disk and restarting holding down the "C" key. Next Format the disk using disk utilities, give the drive one partition. If you cannot do anything with the drive you will need to jumper the speed down. Disk Utilities can be found on the second page of the pull down menu under utilities. It is best to use the option "write zeros" when formatting the drive to eliminate any bad blocks. After you have finished with the format close Disk Utilities and continue with the system installation. Restart the drive from the new system, do the registration then download and install all the updates till there are none left. Now use migration assistant in Utilities to move old data onto you drive from your backup. See if all is well and then set up your new Time Machine backup to external drive.