Check out Virtual CloneDrive, this should let you mount the ISO.
Normally when I install windows I would boot from the CD, but if you mount that ISO it should auto-run and give you the option to install.
You would also need to free up some hard drive space, this can be done when installing from CD but in your case this doesn't apply, I'm not sure if the "live install" has that option.
Have a look at Partition Magic, its a commercial tool to manage your partitions, but it has a free trial you can use. Download, install, shrink your C:\ drive a bit, then create a fresh partition for your second OS
Failing all of this, have you considered running a VM? Just keep one OS installed, then setup Virtual Box and install the second OS in a virtual environment. Thats also a good option if you plan to mess around with Linux / Google OS in the future