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How to install Windows 7 from a Pendrive
http://www.softwaretipsandtricks.com/guides/articles/17/1/How-to-install-Windows-7-from-a-Pendrive/Page1.html
By Super Admin
Published on 06/13/2011
 
Let's see how you can create a bootable USB disk to install Windows 7 which is handy when installing Windows on a system that may not have a DVD drive (or any drive at all).

How to install Windows 7 from a Pendrive

The method is very simple and you can use it without any hassles or expert knowledge. Needless to say that your motherboard should support booting from USB drives for this feature to work. There are a few requirements that need to be kept in mind.

Requirements:
• USB Flash Drive (4GB. If possible, get a 4GB only and not 8 or 16 GB as they take an eternity to format.)
• Windows 7 or Vista installation DVD or iso.
• Follow these steps to create bootable Windows 7/Vista USB drive using which you can install the Operating systems without booting from DVD or starting the installation from an already installed Windows.
• Open an elevated Command Prompt with admin rights. To do this, type cmd in Start menu search box and hit [Ctrl]+ [Shift]+ [Enter].
• Go to Start menu > All programs > Accessories, right click on Command Prompt and select Run as administrator.
• Type in the following commands in the command prompt: DISKPART
• Next type LIST DISK command and note down the Disk number (ex: Disk 1) of your USB flash drive.
• Assuming your Pendrive is “Disk 1”. Type SELECT DISK 1, then CLEAN CREATE PARTITION PRIMARY
• SELECT PARTITION 1
ACTIVE
FORMAT FS=NTFS
• This process takes quite some time.
ASSIGN
EXIT
• Don’t close the command promp. Just minimise it.
• Insert your Windows7/Vista DVD into the optical drive or mount the ISO using PowerISO or Daemon Tools or something like that and check the drive letter of the DVD drive. I am assuming that your DVD drive letter is “F” and USB drive letter is “I”
• Type ‘F:’ in Command Prompt where F is your DVD drive letter.
• Type CD BOOT
• Type ‘BOOTSECT.EXE/NT60 I:’ where I is your USB drive letter to update the USB drive with BOOTMGR compatible code and make it bootable.
• Now, back in Windows Explorer, simply drag and drop all the files from the mounted ISO image or the DVD onto the USB disk creating a copy of the installation disk.

Your USB drive is now ready to boot and install Windows 7/Vista. Then, with the USB disk inserted, reboot the machine and change the boot priority at the BIOS to USB from the HDD or CD ROM drive. The system should now boot from the USB disk we created and start the installation. The rest of the setup process should be identical to installing from a DVD disk. That’s all there is to it!