Can't install Mac OS X Lion

I recently installed a new Hard drive into my MBP. The install for the OS worked for about a week, then began to freeze. I was forced to manually shut down the Macbook (Holding the power button). I figured it was an OS problem, so I decided to wipe the HD again using the Disk Utitlity off the OS Disc. I tried to install the OS and halfway through the installation of the OS I got an error message saying "Install Failed, Mac OSX Could not be installed on your computer, click restart to restart your computer and try installing again" Now when I press restart, the same thing occurs. I try manually shutting down and booting from the disc, to partion the HD again, but it doesn't boot, it goes straight to the installation. How do I get rid of this to get my Mac up and running 100% again? Here's a photo of what I get through the installation. Its not the best quality but its the best my 11" Acer can get lol. Hope it helps!
Macbook Specs:
Mid-2009 Model
Intel 2.26ghz Processor
500GB, 7200rpm Internal HD
2GB Ram
Running OS Lion

Back up all data. Boot into Recovery (command-R at startup) and erase the startup volume in Disk Utility. Then reinstall OS X and restore your data in Setup Assistant.

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