Creating a bootable external drive for OS X Lion

Here's what I would do:

1. Use CarbonCopyCloner (free) to clone your internal Macbook drive to an external drive. The reason for doing this is to create an easily bootable volume OTHER THAN your internal drive.

2. Once the clone is complete (it can take a while, see note below), boot from the external drive. Easiest way is to have the external running and connected, restart, and as soon as you hear the startup sound, hold down the option key and KEEP HOLDING IT DOWN. In a few moments, the startup manager will appear and you can use the mouse pointer to select it and boot from the external.

3. When you get to the Finder (warning: it should look exactly like your internal drive did, so be sure you're working with the right drive), now you can "go to work" on the internal.

4. Reinitialize the internal with Disk Utility (WARNING: don't do this until you are CERTAIN that everything you want to keep from the internal is indeed on the clone!).

5. Now, mount the Lion install .dmg file on the desktop. Launch the installer. At the right moment, "aim it" at the internal drive.

6. Let the installer do its thing, and you should then have a completely clean copy of the OS on the internal drive.

7. At this point, you can reboot from the internal drive, and you will get the "Welcome to Mac OS" on bootup. Start the registration process, and at the right moment it will ask if you want to import an existing account, apps, etc., from an external drive. At this point you can select the clone as your source, and restore your user account, apps and data as they were before.

8. BE CAREFUL! the migration assistant may "overlook" some files on the clone. So when it's done, you want to do a comparison to be sure that everything is restored as you wanted.

9. At this point, you will want to use software update to bring your OS "up to date".

This should give you a completely clean OS for a "fresh start"...

 

This guide helped me create a backup DVD... Then I was able to install Mountain Lion on my old Leopard Macbook by following these steps.

 

Create bootable external drive

Here is simple review, how to create bootable external drive for Mac

http://www.file-extensions.org/article/boot-mac-os-x-from-external-storage