Cannot proceed with installing Lion on an external drive

Hi everyone,
I have a late 2008 MacBook Pro, 10.6.8 installed. I'm trying to install Lion on an external HDD connected via an ExpressCard/SATA adapter. The target HDD has GUID table with a single partition containing a couple of regular folders (no OS installed). I boot up my Snow Leopard OS, run the Lion installation, choose the external HDD and it starts the installation with no warnings.
Then when the progress bar reaches the end, I'm told to close all applications and restart. After the restart I'm suddenly booted to my old Snow Leo. I see a Mac OS Install Data folder on the external drive, but I cannot boot off it and cannot continue the installation.
I have a suspicion that the problem might be that I haven't formatted the drive and it contained some data when I started the installation, but I doubt this is the cause. I don't want to format the drive because it contains some necessary data.
If anyone encountered anything like that, please describe your cases.
Thanks a lot

Hi. Thanks a lot for the quick response. I bought Lion on the App Store but it's not downloading. It says "Waiting..." and has now for ten minutes. It's also trying to download the update to another app and it's saying "Waiting..." for that one too. Not sure what to do or what is going wrong.
Okay, just now the download started working. I would delete this reply but I don't see how to do it.

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