Wipe out start up disk and start all over?

I am usually pretty good at figuring these things out for myself, but I am stumped.

I want to completely wipe out my hard drive (which is my start up disk). I am running Lion (downloaded from the App Store) and I have the Install DVD of Snow Leopard. I've gone to Disk Utility and erased the hard drive and 14 hours later...all my data is still there. I know there is a way to do this because I did it with Snow Leopard before I upgraded to Lion (by using the Install DVD) I've tried using the Install DVD this time but it does not work. I can only get to the screen where you choose the hard drive to erase, but I can't erase the hard drive because it's the start up disk. I want the computer to be like it's brand new, but I also don't want to buy a new hard drive. Can anyone help me?