Kernel Panic after restoring with Time Machine

I'm trying to replace my 250GB HD with a 500GB one, but when I reboot after the TM restore, I receive a kernel panic. The message contains the error "panic .... /sbin/launchd, errno 8 ....", and then gives the stack trace. I think errno 8 is 'incorrect format', but I'm not sure what that means in this case. I don't know what to do next, and could use some suggestions.

Here is the procedure I used:

- Backup everything with TM to an external drive (500GB HD)
- replace HD
- boot from original OS X install DVD (10.5.5)
- create a single volume on the new HD, using the whole HD
- Restore from TM backup (completes in about 3 hours)
- Boot from new HD - kernel panic each time

A couple notes:

I verified that /sbin/launchd exists on my TM backup.

- I'm running 10.6, but I tried booting from my snow leopard disk (which I ordered shortly after receiving my computer), and that did not work, so I went back to using the original one I received with my computer (leopard). Could this be causing the problem?

- The machine boots fine when I re-install the original 250GB drive, so I know I don't have any other h/w failures

- With the new restored HD inserted as well as the install DVD, the machine wants to boot each time from the HD, and not the DVD, giving me an endless loop of kernel panics. I thought it would boot from the DVD if it's installed. Is there a way to over-ride, and select the media from which to boot?

Any thoughts or suggestions are much appreciated.

Thanks,
Jeff