I think you are going to have to wipe your disk(s) and install fresh because the 10.7 recovery partition may be incompatible with your Mini Max machine running 10.8. I have one plugged into a fast internet and will be waiting a while to update it.
The file layout and server systems are not compatible and consist of totally different setups. Slow down because ML Server.app is going to be LOTS of major changes. Don't install it on a deployment machine is my advice. The good news is that its low price means you can install it on your devbox and learn what makes it tick.
Figured out the problem. I was running the installer from a DMG file I pulled down on a different Mac. The server log was showing a problem when it rebooted that it couldn't re-mount the Volume that the ML install was on which is why it booted back into Lion. To fix it I basically opened up the app store and redownloaded the file from there and ran the installer from the Applications menu and it went through.
So to sum it up, if your installing ML on a Lion server with a RAID system volume, just run the app store download and install it from there, don't try to install it via DMG mount or bootable DVD/USB.