Lion installations get counted when you download Lion from the App Store. The App Store send your Mac's UUID to Apple's servers and ties the purchase of Lion to your Apple ID. It will then increment the purchases or downloads of Lion by one for every new UUID that get tied to your Apple ID. Of course, you can burn the Install_ESD to a disc or use the Lion Reinstallation Utility to bypass this restriction.
The feat of getting past the screen where Lion requests your Apple ID upon installation isn't that hard. All you do is press Command+Q and click Skip. Its been like this since 10.4.0.
For the sake of providing information for others on this forum, I downloaded Lion with my free Lion upgrade from the App store. I followed MacRumors instructions on creating a Lion install disc on a DVD, I made a USB install disk with Lion DiskMaker, and I've updated from SL using the Apple Lion Installer saved on a Windows network share.
"[G]etting past the screen" was even easier than that: I just hit next without entering information and continue and it finished the installation.
Lion installs fine with the full ESD on a USB disk to a clean partition.