InstallESD.dmg requires a 4.3 Gb partition as the minimum. This allows you to split your USB drive and use the second partition for your other files and documents and still be able to boot and install Mac OS X Lion from it. Update: You can have more than one partition on your target disk with this method. Change the volume name to Mac OS X Install.
Click your USB drive in the drive list at the left, and select the Partition tab. Insert your USB drive into a USB port, and launch the Disk Utility. If you have already bought (and upgraded to) the Lion, you can create your own Mac OS X Lion Install drive using any spare 4.3Gb+ (8Gb to be safe) USB thumb drive. Apple has released the Mac OS X Lion USB Drive, but I doubt it’ll be a hit for $69. Ouch.
