My solution that worked:
I have a same problem last night while installing Lion.
The problem is with Bootcamp.
1. Backup all important data from Windows partition (I just copy MY documents to external disc...)
2.Open DiskUtility (Aplications/Utilitys)
3.Click on Bootcamp partition and hit - on bottom
4.Now you will have empty space there. Hit + on bottom and add Mac Journaled parititon (instead of ex bootcamp)
4.When it apear, select it and then hit - on bottom.
5.Now, your primary partition should expand on whole disc including space previosly ocupied with Bootcam/New Mac partition. If not, try to expand primary partition by pulling parititon border to bottom.
6. Click Apply.
Now, your instalation should go fine.
(start new instalation in Applications folder).
Hope this will help!