Here are three different ways to put Lion on a USB thumb drive. If you buy and install Lion from the App Store it downloads all 3Gigabytes from the App Store, installs Lion, then deletes the installer! So when you go to install it on another machine it needs another 3Gigabyte download! Here’s how to make a re-usable installer.
Option 1: Put a full bootable Lion installation on the USB Drive with a recovery partition.
What you need: an 8G thumb drive and OS X Lion from the App Store.
What you get: A USB stick you can boot off and repair your Lion installation from.
Download the Lion installer from Apple App Store. DO NOT INSTALL IT ONTO YOUR COMPUTER OR THE INSTALLER WILL DELETE ITSELF. MAKE A COPY OF THE INSTALLER. If you have already installed it and it has deleted itself, go back into the App store and click on ‘purchases’ and next to Lion it will say ‘Installed’. Now option-click on ‘purchases’ and ‘installed’ will change to ‘install’ so that you can re-download the installer.
Format your Thumbdrive using a GUID Partition Table, and ‘ Mac OS Extended (Journaled)’, then you can run the Lion installer and install Lion onto the thumb drive.
More info here: http://support.apple.com/kb/HT4718
Option 2: Create a Lion Recovery Disk.
You’ll only need a 4G USB Drive for this option.
What you get: A USB stick you can repair your Lion installation from, but not run Lion from.
If your Macintosh has an existing Lion Recovery partition (this will be the case if Lion came pre-installed on your machine when you purchased your computer from Apple), you can use this method. It will not be a fill installer but it will use the internet to install Lion onto another computer. It involves downloading a program from apple called ‘Lion Recovery Disk Assistant’
More info here: http://support.apple.com/kb/DL1433
To test if you have a Lion recovery partition, Just hold down Command-R during startup and Lion will give you the option of going into recovery mode if the recovery partition is there.
Option 3: Make a Lion Installation USB Thumb drive like the one you buy from Apple.
What you get: A USB stick you can install Lion from – like the one that comes from Apple.
You’ll need an 8G USB thumbdrive.
1. Purchase and download the Lion Installer via the App store as in Option 1 above.
2. Right-click on the installer and select “Show Package Contents” and find the file called “InstallESD.dmg” in the SharedSupport folder.
3. Use Disk Utility to ‘Restore’ this dmg file to a thumb drive to make a Lion Installation USB drive like you buy from the Apple Store. (the thumb drive must first be formatted as Mac OS Extended (Journaled) with GUID Partition Table.)
More info on this here.