How to install Lion over Leopard if I already have the InstallESD.dmg file?

How can I install Lion over Leopard? I know everyone keeps saying you have to have Snow Leopard, but it seems that you only need it to actually download the file. I have the file and I've created a back-up disk and drive (using a 4gb card) and nothing worked. I don't understand why I can't install even if I have the file. The computer doesn't even recognize the disk when I press option at start up but it recoginizes it as Lion when fully logged in. I can't install using the .pkg file because it says it can't be installed on the running system. I have tried to use the drive and it gives me a EFI Boot when I press option at start up and so I click on it and It goes to the apple grey screen with the circle circling below it. But after a while, that apple turns into a No sign basically. So what else do I need to change or edit to install Lion over Leopard. The startup disk nor the drive are working.

The Lion installer is not a bootable device. You must run the installer like any other application. Since the installer will only upgrade Snow Leopard it may refuse to run. What you might try is putting a bootable Snow Leopard system onto a 16 GB USB flash drive, drag the Lion installer application into the Applications folder, boot the computer from the flash drive then run the Lion installer.
As for creating your own bootable flash drive you will need an 8 GB flash drive for that:
Make Your Own Lion Installer
1. After downloading Lion you must first save the Install Mac OS X Lion application. After Lion downloads DO NOT click on the Install button. Go to your Applications folder and make a copy of the Lion installer. Move the copy into your Downloads folder. Now you can click on the Install button. You must do this because the installer deletes itself automatically when it finishes installing Lion.
2. Get a USB flash drive that is at least 8 GBs. Prep this flash drive as follows:
Open Disk Utility in your Utilities folder.
After DU loads select your hard drive (this is the entry with the mfgr.'s ID and size) from the left side list. Note the SMART status of the drive in DU's status area.  If it does not say "Verified" then the drive is failing or has failed and will need replacing.  SMART info will not be reported  on external drives. Otherwise, click on the Partition tab in the DU main window.
Under the Volume Scheme heading set the number of partitions from the drop down menu to one. Set the format type to Mac OS Extended (Journaled.) Click on the Options button, set the partition scheme to GUID then click on the OK button. Click on the Partition button and wait until the process has completed.
Select the volume you just created (this is the sub-entry under the drive entry) from the left side list. Click on the Erase tab in the DU main window.
Set the format type to Mac OS Extended (Journaled.) Click on the Options button, check the button for Zero Data and click on OK to return to the Erase window.
Click on the Erase button. The format process can take up to several hours depending upon the drive size.
3. Locate the saved Lion installer in your Downloads folder. CTRL- or RIGHT-click on the installer and select Show Package Contents from the contextual menu. Double-click on the Contents folder to open it. Double-click on the SharedSupport folder. In this folder you will see a disc image named InstallESD.dmg.
4. Plug in your freshly prepared USB flash drive. You are going to clone the InstallESD.dmg disc image to the flash drive as follows:
Open Disk Utility.
Select the USB flash drive from the left side list.
Click on the Restore tab in the DU main window.
Check the box labeled Erase destination.
Select the USB flash drive volume from the left side list and drag it to the Destination entry field.
Drag the InstallESD.dmg disc image file into the Source entry field.
Double-check you got it right, then click on the Restore button.
When the clone is completed you have a fully bootable Lion installer that  you can use without having to re-download Lion.

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