When you erase your HD you'll create at least 2 Partitions. The first should be chose to formated as HFS+ Guid partition table. The second one as FAT 32. Then when you hit the erase button at Disk Utility, it will create an Hybrid disk. The first partition will be GUID and the FAT 32 should be MBR. You will install normally Lion and when you finish you can install Win 7 at the fat 32 partition. You will reformated as NTFS with the win install disk and then normally install the windows.
When finish everything you need to reinstall Chameleon for dual boot.
No, Disk Utility can not format drives to NTFS.
So that's the why you should format it to FAT 32.
Keep on mind that you have to format all the partitions in once. If you format all of them as HFS+ and then you format one of them as FAT 32 it will not work
personally I strongly recommend making 3 partitions 1 for main use, 2 for a clone of your main (if you do something to corrupt your install you can boot into this partition to clone back your main install to it's previous state) and 3 fat 32 for windows.
You may find on the windows installation proceedure it says you cannot use partition 4 (or whichever partition you intend to use for install bearing in mind that EFI is partition 1) cannot be used. delete this partition using the windows installer and create a new one from the unused space and try again.
IF this does not work go back to os x reformat it to fat 32 and try again.
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