Thanks everyone for trying to help! It has taking me a long time trying to restore and having no success.

But I reinstall over 1st partition and success but still confused why I could not restore my image!
1. One Hard drive 2 partitions
2. 1st partition 40gigs
3. 2nd partition 20gigs
4. 2nd partition is set to active so mbr is store on this. So I can format the 1st pat and no mbr error.
5. 2nd partition has windows 32bit.
6. Made image of 2nd partition with TI 2011.
7. Did not make image sector by sector just a one off full partition image. Partition image not cloning.
8. Restore the 2nd partition to the 1st partition and that is where the problem start...
9. Keeps preparing desktop every restart then a blue screen with just a mouse cursor, no applications, nothing.
10. Safe mode is the same too.
11. I also have windows 7 64bit and made an image of that from the 1st partition. But formatted it and thought of using the 32bit version image. Both are genuine
12. Restoring went well with the 64bit image because it was on the same partition. So that is why Ironically it worked! But did not worked with the 32bit version on the smaller 2nd partition.
13. I reformatted it since i was getting no where and install it from my DVD too see if that worked and whola! everything went well. So it shows that you can't recover a image made on a a smaller partition to a bigger one. You need to use the Plus version of TI 2011 to make it work. Or partition your drive so the size is the same, I think I read this some where if correct. Never tried it....
Anyway so the issue you cannot repair it using the windows repair CD since it is not an MBR issue since something is wrong in windows it self because of the image.
Has anyone use TI to restore an image from a bigger or smaller partition or drive to a different size and it worked?
The issue has been solved since I reinstalled.

But still like to know why you can't restore the image from a partition that is smaller then the first. Is it something to do with TI? I think they call it dissimilar hardware and so that is why you need the Plus version.
Hope this helps you all understand my problem clearer..