Firstly you can't do it when your typing and your blinking cursor is in the middle of the word you want to look up, and secondly, make sure that your mouse has changed to a cursor over the word you want to look up. If both of those are good, and your tapping two times quickly with three fingers, then I would just report it to apple, cause your doing everything correctly. Also try it out in multiple apps. Is your problem system wide?
It's not system wide. Apps released before Lion may update to include its new features and the dictionary is one of them. Safari works because it is made by Apple and obviously supports all of Lion's new features.