Trying to restore from time machine

[tbluhp]

I have the latest OS that was used when I last used time machine couple days ago and it was 10.8.2 so I had to reinstall my computer and now when I go into system recovery and try to use time machine restore all I get is that their is no system backups? What is going wrong? I also tried using "migration assistance" but when I go click on the drive from time machine it then ask for a password so I enter it then the continue button is grayed out and all I am able to do is hit back? I am able to restore "files" using time machine" but for some odd reason time machine did not backup my applications only data.

[JediMeister]

If you excluded select folders from being backed up in Time Machine preferences->Options, you cannot do a system restore.

[tbluhp]

The only things I excluded were music and movies and pictures folders no system or library folder was on this list.