Upgrade to OSX Lion – iMac late 2009 – with Parallels & BOOTCAMP Windows XP SP3 (32 bit)

I downloaded Lion just after release and tried to install only to receive the error message “cannot install – no recovery” or words to that effect. I was also not given the option to proceed without creating the recoveryand instead the system was restarted in Snow Leopard.
After potentially giving up and accepting that I had wasted A$31, I tried again 2 months later.
Before I did, I read many forums indicating that Lion could not be BOOTCAMPED with Windows XP.  I also found forums saying it could, but only from an older Mac such as mine shipped with Snow Leopard.  If you have a newly shipped Mac with Lion pre-installed it appears you must use Windows 7.
First step was to upgrade my Parallels to the new Version 7 from 5.  I suggest you do this and ensure that all upgrades are also performed on the Windows side.
Then, the most useful forum I found was the following: http://www.mac-forums.com/forums/os-x-operating-system/245192-installing-lion-no -recovery-error.html
To create the partition,use “disc utilities” and articles on the Apple site if you are unsure how to do it.
You now have 3 partitions: Mac HD, new partition, Original BOOTCAMP.
Now proceed to install Lion, which worked perfectly.
After installation I found that the new partition was also labelled BOOTCAMP.  The BOOTCAMP I wanted to use was the 3rdpartition, the original BOOTCAMP.
After no success launching my BOOTCAMP but knowing it was still there, I decided to delete the 2ndpartition and take this out of the equation (make sure you resize your MAC HD partition to take up the empty space this leaves).  I’m not an IT expert so it’s possible I don’t have recovery anymore but I did copy Lion to a USB and I have Time Machine doing regular backups. 
I also referred to Parallels - http://kb.parallels.com/en/111629.  I removed Hard Disk 1 and replaced with HardDisk 1 that seems to direct it to the newly installed Lion.  I could not link it with BOOTCAMP as stated in the article.
Once all this was done, it still wouldn’t boot my Windows and I was ready to give up.  I left it for a couple of hours to decide whether to reinstall Snow Leopard, then tried one more time with SUCCESS!  I think what was happening is that Lion was still busy indexing and that everything took time to catch up.  This is my only explanation. 
So now everything isworking exactly as before with no issues, very happy I persevered!

If you have not already entered in your wireless providers info, you will need to do that. Just like you did when you entered your network info on the mac side.

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