Lesson learned from this one:
The key to this one is to keep in mind that it doesn't matter that the size of the image may be less than the drive you are restoring to.
What does matter is that the drive you are restoring TO has enough space to house the partition sizes of of the imaged OS.
In my case, the original OS looked like this:
Partition 0 100MB
Partition 1 575GB
Windows 7 Backup image 433GB
attemping to restore to a 500GB physical disk will throw the error stated in the title. I ended up procuring a 1TB disk and the restore is moving forward.