You cannot install Windows 7 from an ISO image unless you create a bootable DVD or flash drive. The Windows 7 USB/DVD Download Tool, a free utility by Microsoft, automatically formats your USB flash drive and copies ISO image data onto the device. Windows Vista, 8 and 8.1 ISO images are also supported by the Windows 7 USB/DVD Download Tool.
Get the Windows 7 USB/DVD Download Tool from CodePlex, and then double-click the downloaded file to install the application.
Open the Windows 7 USB/DVD Download Tool from the Start menu or Start screen, and then click the Browse button to select the Windows 7 ISO image from your hard drive. After selecting, click Next.
Insert a USB flash drive with a storage capacity of at least 4GB; since the Windows 7 USB/DVD Download Tool erases all data on the device, back up any important data before proceeding. Click USB Device to proceed.
Select your USB flash drive if you have multiple USB devices connected, and then click Begin Copying. If the flash drive doesn't show up on the list, click the Refresh button.
Click Erase USB, and then click Yes to format and copy the files required to create the bootable flash drive.
Close the Winows 7 USB/DVD Download Tool after the process finishes, or click Start Over to create another bootable flash drive.