I successfully made a bootable USB using the instructions at http://www.makeuseof.com/tag/usb-installation-disk-windows-7-extra-software/ (the comments are closed there). The OS on my system (Win Vista) got corrupt and my DVD drive is also not working.
I changed the boot settings and was successfully able to boot it from the USB drive. The Windows installation started but when it asked for the target drive it is not showing my hard disk partitions (which were 4 in number). Although I can see the hard drive in the BIOS setup. Cant make out what the problem is.