Not an easy one to answer. I'm confused as to exactly what you did?

You say you backed up Tiger to an external hard drive. What did you use to back it up? Then you made a passworded disk image? An image of what?

When you first created the disk image, did you verify that it was indeed on the external hard drive? And if so, where was it at that time?

You stated you booted off the external drive back to Tiger and the image was gone. Is it possible that the image was never created or that it may have been overwritten?

Regards.