If you have a Time Machine backup, you should be able to restore your iPhoto Library as described here:
iPhoto '11: Restoring from Time Machine with iPhoto '11 (9.2 or later) and OS X Lion 10.7.2 (or later) - Apple Support
I recently had a data retrieval completed from my damaged MacBook Air to an external hard drive. I am trying to restore my iPhoto library from that backup. When I open Time Machine and look at the contents of the external hard drive, I do not see the iPhoto library; however, I see it when I use Finder
That looks like you're restored backup is not a Time Machine backup, but a copy of your original drive. In that case simply drag the iPhoto Library you are seeing on the disk with the restored files to your Pictures folder, using the Finder.
You may need to repair the permissions on the library and to repair the library using the First Aid Tools.
To launch the Library First Aid Tools, hold down the key combination option-command while double-clicking the iPhoto icon. In the panel select "repair permissions".
If that does not help, back up your library and use the next option "Repair database". This may take a while for a large library.