IMac Clean install and now won't install Lion 10.7.5

My mid 2007 iMac was haveing trouble connecting to the internet via a browser and I took it into the Genius Bar and their only suggestion was to do a clean install and then see what happens. I wiped the computer and tried a clean install. It wouldn't install OS X 10.7 Lion (which this computer was previously running). I took it back into the Genius Bar and they had to install 10.6 Snow Leopard. And now it won't upgrade to Lion (that it used to run till it started having problems).
What's going on?
Now, 3 weeks later, on our other mid 2007 iMac is starting to have the same issues.
Is there something wrong with the OS? I go to network diagnostics and it says it is connecting to the internet just fine. But it won't connect via a browser or do software updates.
I go to Airport Utilities and it wants me to forget the AirPort Extreme. Exact thing happened on the other iMac and I couldn't ever recover (or discover) the Extreme.
Help !!!!!!!!

You mean 2011 or do you mean Mountain Lion? Lion came out in mid 2011 and ML in 2012. And yes, 7,1 is the model identifier. Here is something I found on running the current OS:
From this site:
http://www.everymac.com/systems/apple/imac/specs/imac-core-2-duo-2.0-20-inch-alu minum-specs.html
Did you try recovery?
Not sure if your machine would be able to qualify for the recovery disk assistant (since yours would need the assistant to create a recovery partition)
http://support.apple.com/kb/DL1433
If that works, you should try using the recovery option (hit Command + Option + R during restart) to connect to Apple's servers and reinstall Lion.

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