I found this extremely useful
blog post earlier today -- I have tested this method, and it worked perfectly to install W7 -- onto a Netbook with no DVD drive, and with Windows upgradeability disabled -- by creating a bootable USB W7 installation drive, then : format, and install
The rest in Kevin's words :
It surprised me to find that there are very few dead-simple guides to creating a bootable USB thumb/pen/flash drive for a Vista and/or Windows 7 installation. I cobbled together the following from VistaPCGuy and another source I don’t remember right now.
This will walk through the steps to create a bootable USB flash drive for the purpose of installing a Vista or Windows 7 OS. These instructions assume that you have a computer with Windows Vista installed on it.Required:
USB Flash Drive (4GB+) Kevin's Blog
Microsoft OS Disk (Vista / Windows 7)
A computer running Vista / Windows 7