We had problems attempting to restore a machine using the Windows 7 Recovery Environment. Instead of using a DVD, we booted the PC using a USB flash drive. We also had a USB hard drive attached as it contained the Windows Backup image
After selecting the appropriate system image from the USB hard drive and starting the restore, the Recovery Environment displayed the following message:
Error: The parameter is incorrect
After some investigation, we found this post at Microsoft's site describing the solution. In short, the recovery disk must be removed before you select the recovery image. Once we did that, the image restored without incident.