I had to install Windows 7 Home Premium on a Laptop where the DVD drive doesn’t work. I ordered DVDs, and realized it doesn’t boot.
After creating a .iso image of the DVD I realized the Windows USB tool isn’t accepting custom .iso images, just the ordered from the windows shop.
To make the Windows tool accepting your .iso file you can use the tool from withinwindows: http://www.withinwindows.com/2009/11/01/use-the-windows-7-usbdvd-download-tool-with-custom-isos/
After using it the Windows USB tool is accepting my image.
