When you erased your drive did you have it reformat to Mac OS Extended (Journaled)? This is what you need it to be.
In addition to Grant Lenahan's comments, try powering up and inserting the original install disk holding the C key. (This will make the machine boot from the disc)
Hold the C key till you see the spinning progress wheel/gear, then release. Allow to it to finish booting, select your language, click continue, and on the next screen select Utilities/Disk Utilities., from disk utilities select your volume from the left side bar (default name is Macintosh HD, unless you renamed it).
Click the First aid tab, if that screen does not come up (it should), click verify disk, after it runs verify, if there are any errors (they will be in red font) click repair disk. After running this if it still has errors, try running again till it comes up with no errors (should say this disk seems to be ok, in green font)
If after a few attempts, and on ok repair, you may want to bring it in to an Apple Store Genius bar for a evaluation/diagnosis, this is a free service (you may have a failing disk)
If the disk comes up as ok, repair permissions, then eject the disc, and reboot.
Try the install again, and if successful, follow the prompts and set up an account.
The first thing to run id the following update
http://support.apple.com/kb/DL1399
Go to Safari/Preferences/General tab, and set "Save downloaded files to:" Desktop, if desktop is not in your drop down menu, select "other then select Desktop from the left column.
This will download the stand alone installer to the desk top. Click on the installer PKG and follow the prompts.
Then run software update and do all the updates, some times (depending on your internet connection, it is better to run them one at a time, using an ethernet connection if available)
After all is updated you can then try your TM back up. (There may be a/some corruption(s)
Updating may be possible, if your machine will support it.
Lion requirements:
http://support.apple.com/kb/SP629
Purchase Lion:
http://store.apple.com/us/product/D6106Z/A/os-x-lion
Read here about TM
by Pondini, he is the resident TM guru.
http://support.apple.com/kb/TS2986
http://pondini.org/OSX/Home.html
Read thru all the links, there is tons of info.
Hope this helps