How to find the Lion installation image on the iMac?
When you buy Lion from the App Store, it downloads an application named Install Mac OS X Lion to your Applications folder.  InstallESD.dmg is hidden inside this application.  Since it's hidden, a Spotlight search normally won't show it; you need to find the installer application, right-click on it, choose Show Package Contents, and then navigate to the image inside it (both links have instructions for this).

There is one more complication: when you run the Lion installer application, it installs Lion and then deletes the installer.  But you can re-download it if you know the trick: open the App Store, Option-click on the Purchases icon in the toolbar, and you should have a Download button available for OS X Lion.