assuming your already have the the installesd.dmg (if not, you right click the "install mac os lion", or whatever the name of the file you downloaded, and click Show package content; open Contents, and i think its in SharedSupport. If not, just look around in the folders for it. Drag it out of the folder.)
1. partition smallest amount of space in disk utility (mine was 34gb; it wouldnt go any lower. if yours does, make it atleast 5gb.)
2. restore the the "installESD.dmg" to the partition with disk utility (click partiton; source will be the dmg and the destination is the partition)
3. reboot in the "Mac os X" drive (your partition you made)
4. use disk utility to format drive you want to install Lion on as extended (journaled)
5. leave disk utility
6. install lion
7. ???
8. profit