Firstly you should check the usual suspects for that error message. FCP uses that unhelpful message for a few different causes. Prime suspect is having a file in the sequence that has pixel dimensions of 4k or greater. Next culprit might be graphics or stills that are not RGB. A search of this forum may reveal further clues and fixes for this error message. Try searching for Memory Error.
You can often find the culprit file by rendering small blocks to isolate the part of the sequence that bombs the render. Look at the attributes of each file in the block and narrow down the culprit(s).
It may also be a new issue with Lion. Given the choice I would run a FCP7 system on SL. Apple have said Lion is OK for FCS3 but as it offers nothing for FCS3 functionality and if your system is not running other software that needs 64 bit and Lion functionality then I see no reason to use it as your OS. As always the advice here is a clean install on a wiped drive (after cloning the old drive just in case). SSD doesn't make any difference to install advice.