iMac Disk Repair/Rebuild/Restore from Time Machine

My 2007 iMac is giving me fits. It will not come up after reboot. I have used Tech Tool 6 to boot up and after running tools, get a Validation Error in an Allocation File (bitmap).
I am running Mountain Lion but did not have a boot disk for that OS, so I used my Lion OS USB disk to access the disk utility. All efforts to repair failed.
I have a complete Time Machine backup on an external drive, but the restore option does not see it.

Any input would be appreciated

Terry

I don't understand why you didn't use the Recovery partition within Mountain Lion to do the repairs? Neither Lion nor Mountain Lion are on disk - and yes, you can create a boot disk for either, but you can also use the Recovery partition. (command + r)

If all efforts to repair the hard drive have failed, it may be time to replace the drive. But before you go that route, try using Disk Utility from the Mountain Lion Recovery partition first. If that also fails, go to iFixit: The free repair manual and look up the step by step instructions for changing out the hard drive. Not an easy task in an iMac.