Had two hard drives and one crashed losing those photos

I don't have any recommendations for a disk restoration service.  It has been many years since I used such a service.  I'm sure a Google search will retrieve many.

Yes, I think you are starting at the right place.

There is no need to create a new catalog for the restoration of your backup.  The backup will restore a copy of your old catalog in its condition at the time it was backed up.  However, it would be good idea to backup your current catalog in its present state.  It will be useful if something goes astray when you do the bulk import from the restored catalog.

Once you restore the backup, perhaps you will be able to tell which folders contain the missing files. For example, if you have your folders organized by date or some other scheme.  If so, it will be relatively easy to import the missing photos into your current catalog.  Let me know, and I will walk you through the process. 

I don't know if this information is of any use to you, but if you still have the hard drive that crashed, there are a number of services that can probably retrieve the photos from the damaged drive. They can be expensive.  Twenty years ago, I had a drive that crashed during a power outage, and it contained my daughter's engagement and some wedding photos. The drive was probably only about 500GB and it cost a couple of hundred dollars to retrieve the photos.  But the service was successful.  Since then, I have made sure to have a UPS battery backup for my computer and backup copies of my photos on multiple internal and external drives.

Now, to deal with your current situation, you say that you have a full backup of your catalog (with photos).  You can restore this backup using the procedures found in this HelpX article.  You should probably use the third option listed (restore to new location with original folder structure).  If possible, you should restore to an external drive or to a different internal drive than your photos are currently stored on.  Then, once the photos are restored, you can bulk import them into your existing catalog.  Elements should not import duplicates of photos already in your catalog.

I hope your DVD backups are properly labeled (and still work).  It has been many years since I did an optical disc backup and restore, but I seem to recall a need to insert the discs in a proper order.

You should use your current version of Elements to perform the restoration of the catalog.  If the catalog was backed up on a prior version, it will be converted to the current version.

As for the My Catalog/My Catalog 1 issue, the second catalog was probably created as a copy of the first when you updated to a new version of Elements at some point in the past. Or it could have been created when you went from multiple catalogs to one.

One final thought about retrieving the lost photos:  If your old catalog contained the lost photos, you may be able to display the lost images in Single Image View and take a screenshot of the thumbnail preview.  It will be low resolution, but depending on the importance of the lost photos, it may be worth a shot.

Unless you did a complete backup (pictures and catalogues) you are out of luck.   If you didn't do a complete backup all you would have are the catalogues which are 100% useless without the images.