Filevault home folder issue

OK, ill start off saying that im a total rookie, so please try not to confuse me.....

I had snow leopard on a mini (mid 2010). I thought it would be a good thing to use filevault, so I did.
I upgraded to Lion.
Dont have any means to back-up (im resolving that soon)

I was using Lion for about an hour and all seemed well. The I put a PC generated disk in and my system froze. I had to shut it off via the power button. Upon restart, attempting to log in, I get an error msg that says my filevault protected home folder needs to be repaired. I clicked the repair and it didnt help. It then said I'm unable to log in. Being a complete rookie, It was a single user/admin.

I managed to limp my way into single-user mode and create another user.

In the new user I created, I also managed to 'mount' the sparsebundle. (Mount means to open it up and see whats in it right?)

Anyways, I can see everything in the screwed up home folder but when I get to things like photos and songs, they appear light grey and will not open.

I attempted the fsck stuff to no avail. In the below post, I found where a mistake that I made was.

https://discussions.apple.com/thread...art=0&tstart=0

Anyways, to cut to the chase, I am planning on trying to back up the home folder (do I just backup the sparsebundle? can I write it to a dvd?) and do a fresh install/restore.

So after I manage to back it up (theres nothing I need on the new users I made), how do I just wipe everything clean and reinstall Lion (that I bought on iTunes)?
I do not have the original snow Leapord disk.