Lion Install does not work, says "This disk is used for Time Machine backups"

I'm having trouble installing Lion onto my macbook pro intel core 2 duo. 
I am backing up my computer with an external drive using TimeMachine, but i've disconnected it.  Also i'm running SL 10.6.8  
I have a windows 7 partition that was created with boot camp.
I've tried to make sure everything is all ready for lion but when I go to install lion it says "This disk is used for Time Machine backups" and the hard drive is grayed out.
Same problem as this guy: https://discussions.apple.com/thread/3190321?start=0&tstart=0
I'm hearing that a file called "Backups.backupdb" is on the top level of the hard drive, but I see no such file.  I've looked at the invisible files and I cant find it.
I've also created a bootable flash copy of the lion install but that does not work It gives me the same message "This disk is used for time Machine backups".

"Backups.backupdb" if the file in Time Machine.  As the discussion says, you have to find that file and trash it.  Try spotlight to locate it.  If that does not work, down load OmniDiskSweeper from the Internet (free) and go through an organized search to find "Backups.backupdb".  If that takes too long or is too tedious, then if you have everything backed up, erase the HDD and start from square one.
Ciao.

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