Hold my hand: Recovering from failed HD

[troch]

I am sure I am over thinking this and surely over panic'd on this even though the manual tells me to not panic!

The situation is that the internal drive in my 20" iMac died. I took the unit into Apple and they replaced the drive. The machine has been returned to me with a loaded copy of OS X.

I've been using an external USB drive and SuperDuper for my daily backup. Because the drive is USB I can not boot directly from it but rather will have to boot from my OS X install DVD.

My question is, once I boot the machine with the DVD and then choose the Disk Utility / Recover option do I check the option to "Erase Destination" or will the recover wipe out/update/modify the existing OS X installation that is on the new hard drive?

Is there anything else that I need to do to complete the recover?

Thanks!
Rod