Unable to install Moutain lion from Recovery Parition

Hi Folks,
Well running into some issues with my iMac. (27" i5, 1TB drive)
Problem started when my two year old forced 2 CD's into the DVD bay. DVD was not happy and was making this horrible grinding noise.
Went to Apple store which is 3 Hours away, they told me they would have to keep it overnight as they needed to replace the DVD drive.
Since I was not staying overnight I decided to bring computer home and try to extract the disks myself and save myself $200 to replace the Superdrive.
Went onto YouTube and looked everything up on how to take the machine apart, pretty straight forward.
Took the iMac apart, got the DVD drive out and was able to extract the 2 CD's.
Put everything back together and started it up.
Mac started up as it usually does but was not getting WiFi connection, ran the diagnostic utility and it was still not working so decided to shut the machine down and restart.
Upon restart got the MAC logo and a Greg Status bar at the bottom, let it complete but after the status bar disappeared it just sat there and did nothing, restarted machine several times with same results.
Loaded the MAC from my recovery partition (Command R) Ran the Disk Utility, and did a Verify Disk on Macintosh HD, got an error "This disk needs to be repaired. Click Repair Disk "Ran Repair, went on for several minutes then got error "Disk utility can't repair this disk...disk, and restore your backup=up files"
Exited Disk Utility and selected Reinstall OS x from Utilities Menu.
Clicked on Continue, agreed to the license agreement then selected Macintosh HD but get a message "This disk is locked"
To make matters worst I guess I didn't correctly understand iCloud because I now get a sense the not all my photo's and music will be saved in iCloud, only the ones that I've purchased from apple and only the photoes taken from my photostream.....
Sort of a dead end here...not sure what to do next.
Any help would be appreciated.

Reboot into the recovery mode, launch the Terminal app, copy & paste each one-liner into the window that pops up, and hit the return key. Quit the Terminal app and try reinstalling the OS.
/usr/bin/chflags 0 /Volumes/*
/bin/chmod a+rx /Volumes/*

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tntndr wrote:
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Message was edited by: VikingOSX

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Unable to install Moutain lion from Recovery Parition

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