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What is the proper way to restore a MacBook from an encrypted Time Capsule backup?

AppleCare fixed my MacBook and had to replace the drive. I am now trying to restore the Time Machine Backup that is saved on a Time Capsule.

The setup asks how I want to transfer information and I check the option for Time Machine. Next when it shows the correct Time Capsule I select it and it prompts me to enter the password for the Time Capsule. After it accepts the correct user name and password it just sits there. It doesn't load any further options and I cannot continue.

I can connect to the Time Capsule and mount the backups from another mac so I know the backups exist, but I can't seem to restore the backup through the setup.

I believe this may have something to do with the fact that the backup is encrypted. When searching for solutions, I can find lots on "Restore encrypted Time Machine Backup" or "Restore from Time Capsule" but little on "Restore Encrypted backup from Time Capsule".

So, what is the correct way to restore encrypted backup from a Time Capsule?

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