I am trying to install Lion on my imac and it says it can't make a recovery disk

I am trying to install lion and receive a message saying it can't make a recovery disk.  I am using a 2.33 GHz Intel Core 2 Duo iMac.  I do have bootcamp on it, but was never able to install Windows.

What happens when Lion installs is it creates a Lion Recovery Partition at the very bottom area of the drive, this is used to Command R boot into and perform Disk Utility Repairs and reinstall Lion from Apple's servers much like a 10.6 disk will.
So when you ran the Lion installer, it couldn't create this small partiiton, either because the GUID partition table (the map of your paartitions on the drive) is borked or there is data all the way to the bottom of the drive or OS X thinks there is.
You set up the bootcamp parittion, so run that and delete the Bootcamp partition as your not using it or Windows, once it's finished reboot and try installing Lion again.
I should warn you, Lion will not run your Rosetta based software or hardware drivers for external hardware, you may have to purchase all new versions. Not only that, hardware drivers may not be available for 10.7 thus rendering your third party printers, scanners etc useless.
Before you install Lion, you should consult this web page
http://roaringapps.com/apps:table
to see if your current programs will break and when to expect a new version (likely paid)
Also you shoudl check your hardware and the makers site if there is a 10.7 compatible driver/software for them.
And once you think your ready to go to Lion, get a blank external powered drive and a free/donationware copy of Carbon Copy Cloner to clone your present (non-Filevault) 10.6 boot drive to the external drive.
Later if 10.7 doesn't work for you, simply hold the option key and boot off the 10.6 clone, use Disk Utility to Erase the entire drive (the whole drive!) and reverse clone 10.6 back onto the internal drive.
http://www.bombich.com/get_ready_for_lion.html

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