Creating a bootable USB can be done like this (on a running Vista/Windows 7 machine - not XP-and apologies if you already know how to do this :-))
1. From a command prompt run "diskpart" without the quotes (UAC may kick in so just say OK);
then type the following commands
2. select disk 1
3. clean
4. create partition primary
5. select partition 1
6. active
7. format fs=fat32
8. assign
9. exit
Copy the contents of the Windows 7 DVD to the USB drive and set the target PC to boot from it.