Time Machine Restore Encrypted Backup

Got a new HDD and trying to restore from my backup which is Timemachine encrypted on my ReadyNAS. Booting from the recovery disk works etc, I can see and log into the NAS and see the correct time machine backup (I have two TM backups for two different Macs on the NAS), but then after selecting the relevant TM backup to be retored I get the message that it is encrypted and that the password does not match. I have not been prompted to enter one, only the login and PW for the NAS. There does not seem to be any place to enter the password to decrypt the backup. Any ideas? Thanks vm!

Try Repairing the backups, per #A5 in Time Machine - Troubleshooting.
If/when you get this sorted out, strongly consider switching to File Vault 2.  It works much better, especially with Time Machine.
Or, if possible, only encrypting a few sensitive items, per Protecting confidential documents in a secure disk image.
Message was edited by: Pondini

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    Time Machine REFUSES to backup this directory. It will backup the 1TB drive and anyting else I create in it, but not the home directory. I tried every permission trick I could think of or found online. I even tested it further by formatting the 1TB drive fresh, adding a new user, configuring the user to use the 1TB for their home directory and it still won't back it up (this was a test of permissions the OS set, to make sure I didn't change my data perms somewhere along the way). Time Machine would not backup the new user's home directory on the 1TB drive.
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    Open the Time Machine preference pane and unlock the settings, if necessary. Click the Options button. If there is one particular folder with items that are not being backed up reliably, add it to the list of excluded items. If there are many such folders, add your home folder to the list, or add a whole volume (i.e., what Apple calls a "disk.") Save the changes.
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