Update: Microsoft has created the Windows 7 USB/DVD Download tool to make this very easy.
I used this guide as a set of directions - http://kurtsh.spaces.live.com/blog/cns!DA410C7F7E038D!1665.entry
1. Get a USB Thumbdrive between 4-32GB.
If the drive is larger than 32GB, Windows cannot format it as FAT32, so an alternate utility must be used. Windows can still read FAT32 partitions larger than 32GB, though some devices cannot.
2. Run cmd.exe
as administrator and enter the following commands followed by Enter
diskpart
list disk
select disk #
(where # is your USB drive as determined from step 2)
clean
(This step will delete all data on your flash drive!)
create partition primary
active
format fs=fat32 quick
assign
list volume
exit
bootsect.exe /nt60 F: /mbr
(where F:
is the drive letter of your USB drive as reported by list volume
)
3. Copy the Windows files from the ISO or other source using robocopy
robocopy.exe E:\ F:\ /MIR
where E:\
is the source and F:\
is the destination. Drag-and-drop or copy/paste can also be used, if you know what you're doing.
Configure your PC to boot from the USB drive
In some machines the USB thumbdrive will appear to the BIOS as any other hard drive. You need to muck with the boot sequence to place the thumbdrive higher in the boot order than the local hard drive.
Note that after you do this you might
want to reset the boot order in order
to ensure that BitLocker doesn't
detect boot changes based on the fact
that the thumdrive is missing if it
was there when you encrypted your
drive.