Install Windows 7 from an HD

…not a CD or USB drive. Install Windows 7 from the very hard drive it will be used on. 

1. Preparing the HD with Windows 7 setup files.

Connect the hard drive to another working computer.
Format the hard drive to NTFS (Quick format works fine; multiple partitions also work).
Copy the following from your Windows 7 disc:
Boot, Sources and Bootmgr

2. Making the HD bootable

Using Windows XP, Vista, or 7, open CMD as Admin (Windows key + R, type CMD, hit Enter)

Enter the following commands, (replace X with what applies to your hard drive):
diskpart
list disk
select disk X
list partition
select partition X
active
exit
X:\boot\bootsect.exe /nt60 X:

Exit and shutdown.

3. Booting and installing Windows

Place the hard drive back into the target machine. Make sure that the BIOS is configured to boot from the hard drive. If you did everything correctly, you should see “Windows is loading files” and setup will load (really fast, too, because it’s loading from the hard drive). Install Windows as usual (but don’t format your drive this time in the installer – otherwise it will erase the Windows 7 setup files too!).

4. Final steps/housecleaning

We’ll have to quickly edit the boot menu once Windows is installed.

In Windows 7, hit the Windows key + R. Type msconfig, and hit Enter.
Click to the Boot tab at the top.
Click ‘Windows Setup (\windows)’, and hit Delete.
Click OK.
Click ‘Exit without restart’.

And lastly, delete the ‘Sources’ folder from your hard drive root (this will free up 2-3gb).