I'd like to offer a different perspective on McGowan's book from the previous reviews. I can completely understand seeing this book as difficult and obscure without the necessary background in Lacan. In that sense, it's not really something I'd recommend for Lynch fan wanting some analysis. Lacan's thought is notoriously complex and a reader unfamiliar with the discourse cannot be expected to comprehend the intricacies of McGowan's psychoanalytic analyses. Additionally, the terminology used will be a major stumbling block.
However, for those who are familiar with Lacanian film theory, this book is a dramatic step forward in remarkable cogency and clarity. I've read a number of essays and studies on Lynch using Lacanian theory such as Slavoj Zizek's "Art of the Ridiculous Sublime" - a much more difficult and unrewarding book. While Zizek presents some great ideas, his style can be difficult and less direct that one would hope.
Fortunately, McGowan is a very clear writer seeking to communicate difficult concepts in language that is as simple as possible without sacrificing specificity. I've been studying Lacan and psychoanalytic film theory for about a year now (not all that long) and I was able to read through this without too much trouble. A basic orientation in Lacanian discourse and a review of some secondary sources should be sufficient for understanding and enjoying "The Impossible David Lynch".
I'd also like to recommend two other secondary sources on Lacan for those wanting an inroad to his concepts and terminology. First, Bruce Fink's excellent "The Lacanian Subject" is a great place to start. You'll find excellent explanations that develop over the course of the book leaving you with a solid foundation. Second, "An Introductory Dictionary Of Lacanian Psychoanalysis" is a handy, well written resource for both discovering new terms and for reminding oneself of familiar terms.
Overall, I found McGowan extremely knowledgeable about both Lynch and Lacan. His analyses are illuminating and fresh. If you're a casual reader, this will be a difficult book to start with and I would recommend Michel Chion's "David Lynch" instead. However, if you're comfortable in the field of psychoanalytic film theory, I highly recommend this book as an outstanding example of what Lacanian analysis can do.