External hard drive not recognised in migration assistant.

I've just had a new hard drive in my MacBook. Luckily I had backed up everything to an external hard drive before the mac went wrong.
When I got home the mac started as new but when I got to the part to set up my mac from another device, and plugged in my external HD it was not listed.
I had to continue as a new set up thinking I could maybe set up later.
I updated the software, installed snow leopard, and updated again then tried to use migration assistant. Again it is not recognised it just has the spinning circle as if it is searching/waiting to find my external HD.
I don't understand why this is not working as the external HD shows up on the desktop and I can view the files in it.
I've seen some people said you can drag and drop, but I want to set up the computer with all my settings etc as it was before.
I know the external HD works as I used it to back up and set up as new when I installed snow leopard on my mac previously.
If anyone knows what I can do I would really appreciate it as my nearest apple store is 30 miles away, and I've had to go there and back twice already this week when having the new HD fitted!
Thanks in advance.
Vicki

Did you use Time Machine to backup your data to the external hard drive from your old drive? If you did, you should have been able to select Time Machine to migrate your data and settings when you setup the new drive. If the drive mounts to the desktop and you can see your files, there's really no reason why the Migration Assistant app isn't recognizing the drive.

No I didn't have that time machine icon on the mac before. That was the option I chose though as it said "use time machine or other device" obviously because I have the "other device"

I am in the same boat as you are, will be visiting apple store pretty soon.