Open up Disk Utility from your Applications > Utilities folder and drag the DMG file into the sidebar on the left. What you need: an 8G thumb drive and OS X Lion from the App. Head to Contents > SharedSupport and look for the file called 'InstallESD.dmg'. With the USB-based version of Lion, customers will have to do their repair and recovery work with the USB-based Lion drive. Option 1: Put a full bootable Lion installation on the USB Drive with a recovery partition. One potential downside to the USB thumb drive version of Lion: it apparently can’t be used with the recently released Lion Recovery Disk Assistant, which enables users to create a bootable recovery partition on an external drive for troubleshooting and repairing Lion systems in the even anything should go wrong. When Apple launched Mac OS X Lion in July, it promised a USB thumb drive version would be available in August. Apple is now shipping it’s solution: for $69, customers can buy an installable version of OS X Lion on USB media.

But if you don’t have a broadband connection-or anticipate needing to install or recover Lion while away from the Internet-that lack of an installable DVD version of Lion might be a serious problem. For some Macintosh users, the download-only availability of Mac OS X Lion is no big deal: pay your $29.99 and let your broadband connection do all the work of pulling in 4GB of data. The Mac OS X 10.7 Lion is available for installation only from the Mac App Store.

Os x lion usb thumb drive