Welcome Screen:

Now it gets more complicated. You need to format the hard drive at this point in the installation. To do this, go to the Utilities button on the upper OS X bar as pictured below. Then go to Disk Utilities.

The disk utility will come up. Click on your hard drive (Not any partitions you may have, see below - its in the right hand column) and then click the erase tab

Click on the Volume Format drop down menu. I always use Mac OS Extended Journaled. You may be able to use another type, but I know for a fact that that does indeed work. Then name the partition whatever you would like, I'm partial to something plain like Leopard.

Once that is accomplished (It may take some time depending on your hard drive size and system configuration) click the red x button to exit the Disk Utility and return to the installation Welcome screen.

NOTE: Make sure there is a partition on the left hand side that says "Leopard" (Or whatever you named it). If there is not then go to the Partition tab, select 1 partition, and partition the hard drive properly.