Ok, so hold up a second.
Go here, get this -
http://techerrata.com/file/twrp2/m8/openrecovery-twrp-2.8.5.0-m8.img
That's a way updated TWRP from what you have - and might be part of the problem, an older TWRP.
Get it into your sdk-tools folder - get back out into FASTBOOT USB mode - and then say in sdk-tools in the command window -
md5sums openrecovery-twrp-2.8.5.0-m8.img
(note the space after md5sums)
And if it doesn't say - e51c6ce8db0b7318ef31e1e7bd03c96e
Go download it again.
If it does say that, then command -
fastboot flash recovery openrecovery-twrp-2.8.5.0-m8.img
And if you get the usual: sending 'recovery' (14k or 15k bytes) followed by the OKAY - then...
Go into recovery and just try the normal restore again.
Pro tip - you can copy commands from here into your command window.
Highlight and copy command from here with your mouse.
Click on command window.
Alt+space makes a menu appear - hit E for enter - then P for paste - and boom, copy/paste into a command window.
^ Let me know if you can see an image there, you never know if images require cookies, asking mom, etc etc lol.