Can backup, can’t restore (Windows backup/restore)

On a Windows 7 64bit system, I am able to take a system backup (C: drive). However, after successfully completing the backup, the system tells me there are no backups to restore (in the restore section of the window).

I have also tried to restore from CD and the system also told me there were no backups (to restore from).

I suspect the problem is that I am using an external drive which Windows 7 doesn’t like for some reason.

The drive is connected via SataII and runs quite happily in Windows – it is only when trying to restore that Windows can’t “see” it. (Note: I am able to restore from other backups – it is just the system restore that won’t work).

Any ideas?