Filesystem Size Used Avail Capacity Mounted on
/dev/disk0s2 148Gi 120Gi 28Gi 82% /
Ok and previously diskutil resizevolume limits command revealed about 18-20GB free. So you do have enough free space, but the resize command can't make it smaller, meaning there is some fragmentation. It's a bit of a mystery to me why there'd be fragmentation upon restoring data to a drive — this isn't anything you've done wrong, I've experienced this myself.
So another (possibly small) issue is that I'm betting you no longer have a Recovery HD partition. This is needed for FileVault 2, should ever want to use it. Or a remote system restore, should you ever need to do that on the road. This is a 620MB partition, so it's not big. But the only GUI means of getting it back is to reinstall Mac OS X 10.7. To confirm whether you have it or not, type the following:
and post the results. It's best if you can highlight those results in the "reply to thread" window, and click the # button on the toolbar so that the code formatting flags are used. Makes it easier to read the results.
I don't own a copy of iDefrag but I do have SuperDuper. What I did was backup all my files to it and then restored it to my HDD.
Isn't it the same as doing it on Time Machine?
Not exactly the same, but I do not believe that will alter the outcome in terms of fragmentation. Kindof a rabbit hole to find out...
Step 2 - Using the 10.6 install DVD, during boot-time partition the HDD into two. One being a 25GB partiton for the Windows and the other being for Lion.
The gotcha with this strategy, is that only the Lion installer creates the Recovery HD partition. If you care about that. And the installer only will do it if there is a single JHFS+/X partition (optionally followed by unformatted free space). So you could make a 22.5GB free space 2nd partition. Then install Lion. Then update it, then do a Time Machine restore
One major doubt is that will Time Machine will be able to restore the backup considering that I will be backing up from a 160GB partition and restoring to a 133GB partition?
As long as the restore partition is bigger than the amount of data being restored, yes. Time Machine does not backup the entire partition by sector. A 160GB partition with 80GB of data, will restore to a 90GB partition.
PS : I have 29GB of free space as of now.
That's 18% free space, relative to the size of your current Mac boot partition. You're going to give a chunk of that free space to Windows, leaving roughly 5.5GB free for Mac OS, or 3-4% free space. This is really not advisable. It'll work, for a while. But consider that you need 4GB of temp space just to burn a DVD, and 2+ GB for the cache files various applications and the operating system produce (my user cache folder alone is 2GB right now, and I regularly trash it). I think you're going to run into problems, just a matter of time. You should plan on having at least 10% free space, probably more like 15% which is about where you are now.
I have 4+1GB of ram installed so I would like to got the 64bit way seeing that I'll be using windows purely for playing Dota 2 and Team Fortress 2(It is giving really low fps on Lion).
Yeah. I think you need a bigger hard drive, or you need to move a lot of stuff off the internal drive, onto the external drive.