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Hit the Options button under the partition table and choose "GUID Partition Table". Choose "Mac OS Extended (Journaled) on the left. Go to the Partition tab and select "1 Partition" from the dropdown menu. If you want to burn Lion to a USB flash drive, plug it in and click on it in the left-hand sidebar in Disk Utility. If you're burning it to a DVD, insert your DVD, select the disk image in the sidebar, and hit the "Burn" button. Open up Disk Utility and drag the DMG file into the left-hand sidebar. Navigate to Contents > SharedSupport and look for a file called "InstallESD.dmg". Right-click on the installer and hit "Show Package Contents".
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The installer should show up in your Applications folder. On a MacÄownload Lion from the Mac App Store. However, the other option is to use a Virtualbox VM to run OS X temporarily (scroll down for that info). As far as I know, the only way to properly create a bootable Lion disc/disk is to use Disk Utility on a working Mac.