I've been trying to read up on this but it's still not clear to me the best way to go about this. My original iMac (24" early 2008) HDD is just about dead (now beyond Disk Recovery). I have a Time Machine Backup on an external FireWire 800 disk. I have a new HDD arriving tomorrow. I have the Recovery Disk Assistant on a USB drive, and I might even have the full install DVD one could make from the original Mac App Store downloaded install file, which would be version 10.7.0. I know the new HDD will have to be formatted, that Lion will have to be reinstalled and all my data will have to be transferred to the new HDD from the Time Machine backup. What is the best way to go about this? Do I run Disk Utility from the Recovery Disk Assistant and format the drive on the first boot up, then install Lion, then do a Restore from Time Machine backup? Do I just do the Restore option and it is smart enough to format the disk and move Lion back over in a less fragmented way than what might exist on the backup HDD, and make the Recovery partition? To ensure the least fragmentation should I install the latest version of Lion from the Internet first and then back the rest up from the Time Machine drive? Supposedly there is a Recovery Assistent on Time Machine backup disks after version 10.7.2, so do I skip the USB drive and do an Option key Restart and point to the Time Machine drive and go from there? Thanks. Also, is it better to do a new install of lion and use Setup Assistant with TM backup or Restore from Backup from Lion Recovery?