Thanks in advance, it is really frustrating doing something in my office and then coming to the lab and it not working in front of the students.
Final Cut Express was discontinued about 18 months ago, before the release of Lion (10.7). It is no longer a supported product and was never supported on Lion, nor on Mountain Lion.
While some FCE users have had success running FCE on Lion, many have reported problems including problems with chroma keying. I do not recall any solution to the chroma keying problem, but you might try searching this Forum to see what others have discovered or tried.
Final Cut Pro X is the app supported on Lion & Mountain Lion, and the future direction Apple has taken. Since your computer lab has already moved to Lion (10.7.5) and presumably will move to Mountain Lion in the future, you should begin the process of moving to Final Cut Pro X. I appreciate there are implications for cost, training, inconvenience and re-doing lesson plans. But technology moves on and at some point we need to move with it too.