Install Windows 7 or Server 2008 from USB stick

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On your Windows 7 operating system, open an elevated command prompt and type:

DISKPART
LIST DISK
SELECT DISK 1 (depends on your situation!)
CLEAN
CREATE PARTITION PRIMARY
SELECT PARTITION 1
ACTIVE
FORMAT FS=NTFS QUICK
ASSIGN
EXIT

Now that the USB stick is bootable, all you have to do is copy the WinPE source files on the stick and boot from it.

This approach also works for making bootable WinPE harddisk/USB Sticks, just add (G)ImageX.exe and you’re ready to make backups of complete systems (aka Ghost replacement)