How to install Lion 10.7.5 when hard disk is corrupt

My installation of Lion 10.7.5 is corrupt on the hard disk. System will not boot. I have Snow Leopard installation CD that is partly bootable meaning the installation wizard begins properly and I am able to select where to install Snow Leopard and/or go to the Disk Utilities app. (I have already attempted to repair the hard disk to no avail). However, when I try to install Snow Leopard on a clean hard drive from the wizard it fails midway. The disk has some scratches on it.

I can download the Lion update from Apple, but how do I install it given these circumstances?