lion reinstall fail

ok so my computer boots up to the gray screen of death. apple logo and spinning wheel. i reboot into lions recovery partition and try everything. heres what happens during each step:

disk utility: when i clicked verify disk it said there were errors and needed repairs. when i repaired it said could not be repaired. after restarting and trying again i decided to verify permissions. bunch of errors but it wont let me fix permissions.

terminal: i try using a combination of chmod, chflags, chown, etc to fix permissions but nothing works, the drive is set to read-only.

reinstall lion: it says this drive is locked.

if anyone has any clue as to what i should do i have a beginners knowledge in unix and know my way around a laptop. please let me know, i've tried everything short of reformatting because important work i did during this past week is still on my hdd and i can see it but i'm not sure how to back it up through terminal or if i can just reinstall lion somehow without affecting my files or if there is a way to fix all my permissions problems.

thanks in advance for all your help!