Reformatting hardrive from time machine backup

HELP with new hardrive setup
So I just installed new memory and a larger hardrive on my wife's macbook. We have the old hardrive and an external where we backed up to with Time Machine. So I went and did the hardware installs and no problems but I received some miss information on the web and didn't realize that I just need to boot from the external. So I put in the OS disc and couldn't get it out without going through the process of installing OSX on the new hardrive. So now I have a like new macbook but without the stuff on it from the old drive.

1 How do I erase and reformat the new hardrive so i can start from scratch with the time machine backup from the external drive.

Thanks