Michael,
I certainly agree about being careful upgrading - ML short circuited some things I was doing with Parallels 7 and then I had to go to P-8. I've learned the lesson.
I followed your suggestion and doing so provoked me to search DuckDuckGo for "where is disk utility spare image format?". That led me to
http://hints.macworld.com/article.php?story=20050601181738987 where I found a terminal command to "Enable hidden disk image formats in Disk Utility ".
That opened up a large number of hidden formats, a total of 16 altogether. One of them was "sparseimage" and one was "sparse". I chose "sparse" but disk utility insisted on naming it SuperDrive.sparseimage.
I do not have access to a SL or Lion computer, so I hope that I now have the appropriate file, even though I don't remember if the email that started all this mentioned that Disk Utility would name it xxx.sparseimage.
I'll proceed with the next step and see what happens.
I hope the information about hidden formats is of use to others.
-Tom