How can I upgrade my 10.7.5 mac to a newer version when it can't even read the disk image InstallMacOSX?
Your Mac is not compatible.

The Mac Pro 1,1 was released in 2006.  Yosemite requires the Mac Pro 3,1 (2008) or later.  Unfortunately, you are at the latest version of OS X that your Mac will support.  See EveryMac.com for full details:


  This system can run the last version of OS X 10.7 "Lion" if upgraded to at least 2 GB of RAM. However, although it has a 64-bit processor, it has a 32-bit EFI and cannot boot in 64-bit mode. It also does not support "OpenCL" running the default video card or the other build-to-order video cards that were offered via custom configuration. Please also note that OS X Lion is not capable of running Mac OS X apps originally written for the PowerPC processor as it does not support the "Rosetta" environment.