Software Problems

First, because of the message the updater is giving you, I'd recommend repairing the hard drive with Disk Utility. (Hold down command-R at startup to enter recovery mode, open Disk Utility from there and use it to repair the disk (not permissions).) I'm betting you've got some hard drive corruption going on, and that could potentially cause all the other problems. Repairing may not fix those problems, but it's an important first step.

(which I had to do a couple of times as it would just stay on a grey screen for ages)

Thomas is right. That grey screen with the spinning gear is a classic sign of a disk problem.

It wouldn't allow me to Repair the Disk

That's because you didn't follow my directions. You have to reboot in recovery mode, then you can repair with Disk Utility.

1 - When I repair my Hard Drive, will it delete all of my data (App, Documents etc.) or will most of them stay in tact?

It shouldn't, but you have a damaged hard drive... anything is possible. If you don't have backups, it's entirely possible that some of your data has been irrevocably damaged.

Positive. Hold down the command (not control) and R keys - and only those keys - before you hear the startup chime, and continue holding them down until you see the Apple logo. If that doesn't work, try holding down option at startup, and select the recovery partition from the choices of volumes to start up from. If you don't see that in the list, there must be something wrong with your recovery partition, in which case you'll need to use your Mac OS X install disk. And you won't be able to use your brother's disk unless the two of you have exactly the same model MBP (including the release date).

Do you have any other accounts on your computer? If so, are you able to log on to those? What about if you restart in Safe Mode? Can you log in then?

This is while running in Safe Mode? Then you've got something seriously wrong with your system. I would recommend reinstalling. You can do that from recovery mode, if you were able to get that working. Just install right over your current system, and that'll replace all your system files with fresh copies.

If you didn't get recovery mode working, then you should probably not only reinstall Lion, but should erase the hard drive first using Disk Utility, as there's something significant wrong. How you do that would be a question of what resources you have available to you. If you have another machine on which you have downloaded Lion from the App Store, you can re-download (hold down option while clicking Purchased in the App Store, then redownload from there) and then create a bootable Lion install disk. Use that to erase the hard drive and then reinstall. If you can't do that, you'll need to boot from your Snow Leopard install disk, use Disk Utility to erase the hard drive and then reinstall Snow Leopard, then use that to re-download Lion.

Of course, make sure you've got good backups before doing any of that. If you don't have backups currently, that adds an extra level of difficulty to the problem.

It won't be that easy. One thing you could try would be to get an external hard drive that is the same size as (or larger than) your system drive. Connect it, then boot from some other system (recovery mode or Mac OS X install disk) and enter Disk Utility. Select the drive containing all your data, then click the Restore tab. That hard drive should appear in the Source field. Now, from the list of drives, drag the new drive onto the Destination field. Then click the Restore button. This will erase the new drive and then copy the entire contents of your main drive onto it. It may take some time, just let it run until it's done.

Once that is done, you can proceed with getting the system back up and running without risking your data. (Though having two separate backups would have been preferable.)

That means that no bootable system could be found, I believe. Generally, it means that your system has been damaged beyond repair. You can read more details here:

http://support.apple.com/kb/TS1892