To completely rule out hardware compatibility issues with the new drive I decided to try installing a W2K test installation from the CD. I first used DISKPART from the recovery console on the CD to ZAP all 3 partitions. I then proceeded to install a W2K instance from the CD onto the new drive. During the install I had it create and format a single 31GB partition for the new installation.

Guess what? The new installation boots just fine! This rules out any motherboard, BIOS, hard drive compatibility issues.

The bottom line appears that Backup/Restore has mis-handled either 1 or both processes.