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I copied Snow Leopard from a DVD onto USB stick to install on a Mac with no DVD, and now I'm keen to upgrade to Lion, but I want to keep a copy of that after buying through the AppStore.

What do I actually get through the AppStore, is it a simply DMG? And As far as putting this on the same USB stick as the 10.6 installer, can I just copy it across or will I need to reformat with a separate partition for each installer?

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Short answer: you can do that, if you create 2 separate partitions for the 2 installers.

The Lion installer from the Mac App Store is an .app, that contains a .dmg that you need. You can copy the .app to the USB, but you won't be able to boot from that. What you probably want to do is to create a bootable USB from the dmg as shown here.

You may be able to repartition the USB without losing the existing SL installation data, so that at the end you have 2 bootable partitions on the USB and so that can boot from either the SL or Lion install images. See this post at SuperUser about when this could be possible.

Whatever you decide to do, I would strongly recommend that you back up the Lion installation .app file and the existing SL install partition that is currently on the USB.

Edit: obviously you want to make sure that you have enough space on the USB stick. 16GB should be enough, given that 8GB is enough for each partition.

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