Mac broke while trying to install Mountain Lion

Question

Well installing Mountain Lion turned out to be a disaster for me.
After downloading the installer and opening it, the Macbook restarted and went into the installer program. After waiting for about 10 minutes it told me the disk needed to be repaired. Fair enough, it's probably nothing, so I opened the Disk Utility app included with the installer. Repairing the disk failed, it told me it needed to be formatted. That not what I expected, but okay starting with a clean slate isn't such a bad idea anyway.
I tried to restart the computer to get back into Mac OS X, to see if anything needs to be back-upped. Sadly, it doesn't want to start up into OS X, I am taken back into the Lion install mode. Tried repairing again, but doesn't work, so okay, I'll format. Everything is on Github and Dropbox anyway.. Except that I can't format, because it refuses to unmount the disk. So I am stuck: can't repair, can't format, can't startup into OS X and can't install Lion / Mountain Lion.
I then created a Lion recovery disk using http://support.apple.com/kb/DL1433 and an USB drive. Started up from it, and still I could not format my drive because it did not want to be unmounted. So I don't know what to do anymore. It's even more weird because the Macbook was working just perfectly fine before, never any problems.
I don't have the DVD anymore, so that's not an option. Should I try single user mode? Bring it in? Buy a new hard drive?

Answer 1

It's being a pain in the arse huh?
Well zap the SMC and the PRAM, I suspect there is something there from the 10.8 installer that's trying to do it's thing.
#1 and #2 here
Step by Step to fix your Mac
Next try option key booting from the 10.7 Recovery USB again,
http://osxdaily.com/2011/08/08/lion-recovery-disk-assistant-tool-makes-external- lion-boot-recovery-drives/
use Disk Utility to Erase the hard drive with the middle option (one step from the right option) on the entire drive (select the drive makers name and size) on the left, it will take a bit, map off bad sectors and give you a brand new EFI and GUID partition map whichh also likely have been borked by 10.8 update.
Then install 10.7 via the USB, then commnad r boot and AppleID and password (required) for 10.7 install, then try updating to 10.8 again, I think it will go well this time.
If not, if you have a Firewire cable and another Mac, you can T boot the sick Mac's hard drive to the desktop of the other and use Disk Utlility to wipe the drive that way.
Another method is to use another Mac to burn a ISO of Parted Magic to cd and option or c boot the problem Mac with that, use the default load in RAM option and it will spit out the disk, use the mount disk option and erase the disk with extreme prejudice. LOL.