I need to restore my latest system image (full system backup image with Windows 7 backup) that was saved to a local USB disk. The USB disk is Bitlocker protected because group policy enforces all plugin devices to be encrypted if write enabled. When I attempt to restore the latest image, the computer never shuts down (stays at "preparing windows..." dialog). I force the shutdown and turn it back on to have it boot into the recovery process. I move through the steps to recover the full image backup, but it doesn't find any backups. The USB disk does contain the VHD file and other meta data. I'm guessing the issue is that the disk is Bitlocker protected. I'm never prompted to provide an unlock password or key for the USB disk, just the boot disk (which is successful). I tried copying the image files to a unencrypted usb disk, but the process never finds it their either. I tried accessing the image from the Network via share from another machine and it did not find a restore image either. Any ideas out there?

What are the USB disks? Are they flash drives? We cannot save image backups to flash drivers and also the restore process will not load it from flash drives. Please copy the images into local disk, or a network location and restore again. Arthur Xie - MSFT

The drives were USB Disks (500 GB). The problem was that our group policy enforced encryption on the external disk and when the bootup to recover the image loaded, it could not find the disk because it was encrypted. Win7 should know about this disk enough to prompt me for the password/key to allow me to recover the image from it. I ended up decrypting the external disk and performing the restore that way which was painfully slow to decrypt 500 GB (an ultimately re-encrypt it). Thanks