What went wrong was your hard drive is failing. The system cannot find a valid bootable system. You can test this by booting to an external drive (which looks like might have to wait for getting home or to the shop)
If the failure is happening fast - you just had bad luck and it would have failed within days no matter what. Get your stuff off and be glad you got things out before the "house burns to the ground".
If you had a slow failure, then the upgrade could have made things worse. This slow failure can often be made better by zeroing out the whole drive. Bad blocks get marked and for a while, it is reliable. You might buy some months or a year, but it's starting to fail.
Did the technician let you know if she or he felt you had a crisis or a slow issue with the HD?
As an analogy, Imagine a large "house" made of four decks of cards and lots of levels. If the far left hand side is shakey but you only are adding cards to the right, it might stand for a long time. As soon as you touch the left, down it comes.
A system upgrade touches everything - and re-writes the core software needed to boot. Your mac just wasn't up to having critical files written reliably and the upgrade brought those errors to stark light.
Put another way, Lion is running on millions of macs.
Sadly for you, something about your mac was different than most and the results quite painful to your productivity. The good news is many are going through the same pain - discovering how fragile HDD/SSD storage can be when a critical file fails to get written correctly.
I hope you get everything fixed, lose no data and can start enjoying Lion.
Best Answer
The last version of OS X compatible with your Mac is OS X Lion 10.7.5. I assume that you have not purchased Lion from the Apple App Store and therefore can not download a copy. The path to store the Mac from scratch would be as follows.
Because of the age of the Mac, you should consider abandoning OS X altogether in favor of version of Linux. What would be available for your Mac depends on the amount of RAM installed.
Debian with desktop has a 512 MB minimum and recommends 2 GB or RAM.
Xubuntu with desktop has a has a 512 MB minimum and recommends 2 GB or RAM.
The current Debian ISO can be downloaded from here.
Ubuntu is a popular Linux. However installing requires 4 GB of RAM. Xubuntu is basically the same, but with a Desktop interface that requires less RAM.
Note: Due to the age of your Mac, Linux probably should be installed to BIOS boot. I have installed both Debian and Xubuntu on a 2007 iMac with 4 GB of RAM.
I assume you have the memory split as 1 GB + 512 MB. The maximum memory is 3 GB. You could upgrade by replacing the 512 MB with either 1 GB or 2 GB. OWC seems to still sell memory for your model.
You probably could install 32 bit Windows 10. The 64 bit version would require a memory upgrade to at least 2 GB. The drivers can be downloaded from this Apple website. I was able to install 64 bit Windows 10 on a 2007 iMac using the 32 bit Windows 7 drivers. You can download and try Windows 10 without a purchase, but to keep using requires purchasing a license. IMO, Windows probably would run to slow to justify the purchase of a license.