Reinstalling

Install or Reinstall Lion from Scratch

If possible backup your files to an external drive or second internal drive.

Boot to the Recovery HD:

Restart the computer and after the chime press and hold down the COMMAND and R keys until the menu screen appears. Alternatively, restart the computer and after the chime press and hold down the OPTION key until the boot manager screen appears. Select the Recovery HD and click on the downward pointing arrow button.

Erase the hard drive:

1. Select Disk Utility from the main menu and click on the Continue button.
2. After DU loads select your hard drive (this is the entry with the mfgr.'s ID and size) from the left side list. Note the SMART status of the drive in DU's status area. If it does not say "Verified" then the drive is failing or has failed and will need replacing. SMART info will not be reported on external drives. Otherwise, click on the Erase tab in the DU main window.
3. Set the format type to Mac OS Extended (Journaled.) Click on the Erase button and wait until the process has completed.
4. Quit DU and return to the main menu.

Reinstall Lion: Select Reinstall Lion and click on the Install button.

Note: You can also re-download the Lion installer by opening the App Store application. Hold down the OPTION key and click on the Purchases icon in the toolbar. You should now see an active Install button to the right of your Lion purchase entry. There are situations in which this will not work. For example, if you are already booted into the Lion you originally purchased with your Apple ID or if an instance of the Lion installer is located anywhere on your computer.

"Lion Internet Recovery

If you happen to encounter a situation in which you cannot start from the Recovery HD, such as your hard drive stopped responding or you installed a new hard drive without Mac OS X installed, new Mac models introduced after public availability of OS X Lion automatically use the Lion Internet Recovery feature if the Recovery HD (Command-R method above) doesn't work. Lion Internet Recovery lets you start your Mac directly from Apple's Servers. The system runs a quick test of your memory and hard drive to ensure there are no hardware issues.

Lion Internet Recovery presents a limited interface at first, with only the ability to select your preferred Wi-Fi network and, if needed, enter the WPA passphrase. Next, Lion Internet Recovery will download and start from a Recovery HD image. From there, you are offered all the same utilities and functions described above.

As with the Recovery HD, reinstallation of OS X Lion from Lion Internet Recovery requires an Internet connection. See "Supported network configurations and protocols" below.

Some computers that did not ship with OS X Lion installed may have a software update available that allows them to use Lion Internet Recovery."

http://support.apple.com/kb/HT4718

Do you not know the password for your wireless network? If you have wired capability, then connect the computer to an Ethernet port on your router. I don't know what to suggest for you than what's available here: Using Lion Recovery when no DHCP service is available. You can purchase the $69.00 Apple USB Lion flash drive installer at your local Apple retailer.

It just needs you to select your wireless network from the list then you will have to enter your wireless network's password.

Was your wireless network turned on? When you first booted to the Recovery HD and the main menu appeared, there would have been a wireless menubar item on the right side of the menubar of the screen. Did you turn on your wireless network?

Are you saying you did not boot to the Recovery HD in order to reinstall Lion?

You need to reboot the computer and after the chime press and hold down COMMAND-R to boot from the Recovery HD. After it boots you should have a screen with a menu window from which to perform the instructions set forth earlier.

Well, then why don't you just try proceeding from where you are to see what happens. I hope that whatever occurred with your XP installation didn't corrupt the Recovery HD partition making it impossible to restore your computer without taking it to an Apple shop.

Did your computer come with Lion pre-installed or did you upgrade from Snow Leopard?