Can't factory reset 2008 Macbook
I just picked up the new Retina Macbook Pro (woop woop!) and so I'm selling my late 2008 Macbook (white) to a friend. It's running Lion, which I'd purchased, so I was trying to restore it to Snow Leopard, as I have the actual disks for those (well, I have the first disk, haha). This isn't the original hard drive that came with the laptop, though: that one'd had a S.M.A.R.T. failure or whatever a few years back and I'd replaced it with a 320 GB Western Digital hard drive.
I'm running into trouble, however, when I try to return it to factory settings. I did the Command+R bit and selected Disk Utility. I then selected the hard drive in the side menu and erased the disk, yadda yadda. I rebooted the computer and it popped up with the install Snow Leopard stuff, so I'm good so far, right? But when I try to select the hard drive to install SL on, it has that yellow exclamation point and says "Mac OS X cannot start up from this disk." What did I do? What do I do to fix this? Has anybody dealt with this before? I have no other options available short of the top menu. I also have only done this once in my life (said hard drive fail/replacement), so I'm not exactly knowledgable in what I'm doing, haha.
Thanks for any help you can give!