MacOS – How to access Mac OS X Base System on Boot Screen

The Mac OS X base system image is not the cause of your problem. See What is the 'Mac OS X Base System' disk image on my 2011 MacBook AIr? for an explanation.

My best guess, based on the screenshot, as to why you can't repartition the Hitachi disk is that it's the current startup device. You need to restart your computer from an an external device—preferably a device that has the Lion Installer on it-if you want to reformat the drive. Otherwise, assuming you have a valid recovery partition, you can erase the Mac partition itself and reinstall Lion without an external device.

Perhaps Apple's Mac OS X 10.7 Help: Recover your entire system document will help you.

You likely ran into a problem with the Thunderbolt Update 1.2 - it's not clear how often this is causing problems (or if the problem was pre-existing and the update process just surfaced it or if the update itself has a problem).

Your best bet for up to date service information is contacting Apple support - especially if you are covered and it's a free request.

Next would be some of the long time Apple blogs like Tidbits that has some very good reporting on this so far.

• https://twitter.com/TidBITS/status/212548049342431232
• https://twitter.com/TidBITS (for updates)

You might booting from an external drive (or reinstalling to an external drive and reapplying the combo update 10.7.4 to the failed drive while booted from another install of Lion) to see if you can avoid total reinstallation.