I can not restore my photo library from back-up

First, my iPhoto library essentially "crashed". It can not repair itself.

Second, it messages that I need to restore from back-up.

I am restoring using Time Machine from an external drive. I pull an earlier version of the iPhoto Library and click Restore.

I am unable to do this as the system notes that there is "not enough free space".

Why isn't the back-up just trying to overwrite the files that are there? Is it trying to create a duplicate library? If yes, then I will not have space. If no, then why am I having trouble?

Bottom line, I need to restore. I cannot.

Help!