Can't restore from sparse image when booting from install disc

[rdlsmith]

I have a new iMac. First order of business is to make sure I can backup and restore the machine. Otherwise, it's useless to me.

The reason I'd want to use sparse is because I can password protect the image file and more importantly, keep serveral versions of backups and keep them on the same drive.

Versioning is very important. If I delete an important file and then backup, it's gone forever if I only have one volume to backup to.

In the instructions for SD, it states that if you can't boot from the restore drive:

boot from the install disc, start the Disk Utility,

Open the image,

select the drive you want to restore to and select restore,

follow the instructions.

(See page 27 and 28 of their User's Guide.pdf.)

I can do all of that until it comes time to select the source and destination. I can't click and drag the image over and browsing to them just shows me grayed out images that can't be selected.

I can, however, do all of that if I'm not booting from the install discs. But then I'm booting from the HD and I don't think I can restore to the drive I'm booting on.

Kind of a catch 22.

Are there any other options? Does the whole MAC world settle for just one backup?

Maybe I should use two drives? One for the clone and one to do everything else? That would be expensive.

Thanks for any help.