I guess I'm not understanding what you are showing me.
It boots up to the desktop? Or do you power it on and go to the Disk Utility? Instead of "Restore", did you try "Repair"?
Start from your Mac OS X Install disc: Insert the installation disc, then restart the computer while holding the C key.
When your computer finishes starting up from the disc, choose Disk Utility from the Installer menu. (In Mac OS X 10.4 or later, you must select your language first.)
Important: Do not click Continue in the first screen of the Installer. If you do, you must restart from the disc again to access Disk Utility.
Click the First Aid tab.
Click the disclosure triangle to the left of the hard drive icon to display the names of your hard disk volumes and partitions.
Select your Mac OS X volume.
Click Repair. Disk Utility checks and repairs the disk.