Create Lion startup on Sandisk Cruzer?

I'd like to create a Lion startup disk on an 8GB Sandisk Cruzer USB flash drive for the sole purpose of running Disk Warrior on my main startup drive without having to boot from the DW DVD (which is painfully slow).
Suggestions?
I have re-partitioned the Cruzer with one (1) GUID partition, and Disk Utility indicates it has a capacity of 7.14GB, with 7.63GB available (yes, that's not a typo), and that the GUID partition is only 7.14GB. I am wondering why the single partition can't use more of the flash drive.
I created an installation of Lion on a 80GB USB drive, then added Disk Warrior, but because of the smaller partition, I have been unable to use DU to "Restore" from the "utility system" to the flash drive.
Ideas?

I have three of those little flash drives, all SandDisk Cruzers. I simply connected them, opened Disk Utility, and immediately formatted them. I did not bother to check if there was anything on the drive since I was not interested in it. I then used the instructions to create a bootable Lion install on one and the recovery assistant on the second (the third is brand new and I just formatted it - see screenshots below). There were/are no Sandisk folders on my hard drive, nor did I have a problem formatting them or using the restore function.
For the OP:
Initial screenshot:
After formatting:
(the disk1s1 is greyed out - not mounted - contains several MB of files and is named EFI, so that is the firmware. This results in the "regular" disk to only have 7.63 GB available).

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