Here's the story...
I had a dual boot configuration on my mac with Mac OS X Lion and Windows XP (made with bootcamp).
I decided to reinstall windows.
I deleted the windows partition using BootCamp.
Tried to recreate the Windows partition with Boot Camp and got: "The startup disk does not have enough space to be partitioned You must have at least 10 GB of free space available"
After reading several posts on this forum I decided to defrag the hard drive and try again.
The defrag did not work and I'm still getting the error, I have 22 gb of free space on my drive.
Also, I tried repair disk and repair permissions
Hmm, my external harddrive says on the box "OS X 10.5.8 or higher (32-bit kernel only)" Could the 32-bit requirement be an issue? Is lion 64-bit?
I tried CCC; I backed up my hard drive to an external drive, erased my internal drive with disk utility, then restored my internal drive from the backup...
And this did not work!
After that, I removed a few large files from my computer until I had 35 GB of free hard drive space.
That did the trick!
Sigh, sigh sigh, I can't help but wonder if all I needed to do was make a little more room on my hard drive all along.