Can anyone provide detailed steps to install Windows 7 RC from a USB hard disk (rather than a DVD)?
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.
Format the Drive
The steps here are to use the command line to format the disk properly using the diskpart utility. (Be warned: this will erase everything on your drive. Be careful.)
Make the Drive Bootable
Next we’ll use the bootsect utility that comes on the Vista or Windows 7 disk to make the flash drive bootable. In the same command window that you were using in Step 1:
Copy the installation DVD to the USB drive
The easiest way is to use Windows explorer to copy all of the files on your DVD on to the formatted flash drive. After you’ve copied all of the files the disk you are ready to go.
Set your BIOS to boot from USB
This is where you’re on your own since every computer is different. Most BIOS’s allow you to hit a key at boot and select a boot option.
Theres an excellent walkthrough at BlogsDNA
It basically uses MBRwiz to make the USB flash drive a bootable device. Is this going to be similar to what you refer as a USB hard disk?
Microsoft now have an option for downloading an ISO when you purchase Windows 7 and a tool for deploying that onto a USB thumb drive or DVD. Windows 7 USB/DVD Download Tool
If you already have windows on the computer you wish to install it on, you can just copy the files from the DVD (or .iso using WinRAR) onto the flash drive and run the installer executable.
This might also give you a bootable flash drive, so you can use it if you don't already have a previous version of Windows on it, although I have not checked myself