Why can't I log in after installing new hard drive?

I installed a new hard drive on my iMac. The old hard drive was running OS X 10.7 Lion that was downloaded from the app store. I don't have an install disk for Lion but have one for Snow Leopard so I installed Snow Leopard first then I was going to go in and Install Lion from the app store. I also was keeping time machine up to date with and external hard drive when using my old hard drive.

After installing the new hard drive I went in and followed the instructions on iFixit on installing Snow Leopard (Steps 1-18) including all the disk utility items. From there I restored the new hard drive from my time machine hard drive. Everything went smoothly up to this point. Now that everything was restored from time machine I go into log into my user account and won't allow me to log on. I also tried other user accounts that I had installed and I get the same thing not allowing me to log in.

I suspect the reason for this is that the time machine back-up was from Lion and right now on my new hard drive I only have Snow Leopard thus creating the conflict. Is that correct? If so do I need to go in and create a Lion Recovery Disk from my old hard drive and install Lion from the recovery disk onto the new hard drive?