Can't Boot After New HD + Time Machine Restore

So a couple days ago my 27" iMac running Snow Leopard started making some weird noises and stalling out. Annoyed, I talked for a couple hours with apple tech support which eventually lead me to run an Apple Hardware Test. This test returned the error

"Alert! Apple Hardware Test has detected an error.
4HDD/11/40000000 SATA(0,0)"

I scheduled an appointment at the Genius Bar, and they replaced the hard drive.

After that I got it home and did a System restore from my time machine backup. It finished fine, but when I restarted it got stuck on the grey apple screen with the spinning dial thing.

I called apple back and they had me do a couple things like repair disk, verify disk, and one person had me reboot into this command line mode and type some stuff in. Nothing worked. After that They had me try to reinstall the OS first from archive, and next by erasing the hard drive and doing it. Both times the install fails with a big yellow exclamation point saying that it couldn't install support files and the OS couldn't be installed.

Any ideas how to fix this?

I'm currently trying to restore from my time machine backup again, but I'm not hopeful.