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I need to use internet recovery to access time machine backup. After restoring , what is the next step to load Sierra OS X? I went thru process with old HD. Restored old drive with time machine as test run. When I chose install OS X it said it would erase drive. That really confused me. Any help would be appreciated.

I think you got things backwards. After installing a fresh drive and then launching Internet recovery to prep and then install the OS. Once its installed you may need to either update the OS to a newer version and/or apply updates. Then you can restore your TimeMachine backup. If your system is booting up under the recovered OS you can still upgrade. This time you’ll need to go to the App Store and download the MacOS Sierra OS installer then run it to update the OS.