Thanks, Chairman Plow, for the
experimentation! -- now we are getting somewhere with some
facts.
Could you let us know a few details about your setup. Based on your post, I assume you took the Lion download, restored the dmg to a external drive clean/empty partition, then booted from it, to install Lion.
Onto what machine (and state) did you install, that is was it over a Leo or older installation, and/or did you use the Disk Utility (your first screen picture) to format the target Mac internal HD drive as a first step.
Which I guess if it installs onto a formatted empty HD, would also pretty much confirm that it'll install onto any Mac that meets Apple Lion requirements, regardless of pre-exisiting (or non-existing) OS version.
(sorry if you posted more details earlier in the thread and I missed them. this thread has gotten entries so off-topic and emotionally-charged that it has become tiresome to read...

)