MacOS install USB not listed in boot manager on startup
I finally was able to borrow a friends Macbook and created the installation drive there. It turns out that was the issue, and it booted fine my next attempt. I suppose the error in recovery was independent to my Macbook Air and just needed a reinstall. Because TransMac did not work on different computers, MacOS's, and TransMac versions, I can conclude that creating MacOS installation media via this method does not work.]

Update:
I received a second Macbook Air and got the same error in the OSX Lion recovery. This might be an internet problem and it wouldn't due harm to check try a different connection.