TM Behavior?

A little background on this.

Yesterday i found myself wondering why my iMac was acting weird. There were a few things that just did not seem right. First my WD My Book was running slowly. It took me about 30 minutes to copy 4 GB of info from my Computer over to the External HD. I was also running into problems with Safari and Firefox. They were having a hard time playing videos like the ones found in Apple.com.

These where just the major problems that where noticeable. There were other minor problems like DMG files not wanting to umount, mail.app failing to sync with Gmail\.mac .

Yesterday I decided to do 2 things. Clean up my Desk and re-arrange my computer equipment, and also I decided to do a clean install of Mac OSX Leopard. My plans where to do a final backup on Time machine and then wipe clean my HD and reinstall everything. After a few Hours of cleaning and rearranging I was ready to reinstall the OS. I cut my final backup, and just for safety I copy all the iLife libraries (Iphoto Library + all project folders).
90 minutes later I was ready to restore from my Time machine backup. What I did was installed the OS and patched everything. I then booted with the installation CD and chose to restore from the Time Machine Drive. I did this because I am only using TM to backup my Home folder, I excluded the System/Application/and Library folders, and I also added a few other locations I prefer to backup.

The problem was that the Restore utility did not find any backups to restore from in my HD. Thankfully I had made copies of everything important, I also noticed that if you go in your TM backup folder and go into the latest folder that you are able to restore whatever folder/file by copying from that location. In the end I was able to get back up and running and all the small.

Is this normal of TM? I was under the impression that my computer would recognize the TM backup on the drive and I was going to be able to restore my folders from there.