The key is to get a 32-bit version of Bootsect.exe* and place it in the same folder you installed Windows7-USB-DVD-Download-Tool.exe (WUDT) file. The default install directory of that file in Windows 8 is
C:\Users\USERNAME\AppData\Local\Apps\Windows 7 USB DVD Download Tool\, then run that WUDT tool again.
*Finding a legitimate version of Bootsect.exe can be tricky. For some reason, MS doesn't make it readily available. However, if you happen to have an ISO for a 32-bit Windows installer, you can find it in there. Just copy it from the /boot subfolder in that ISO to the WUDT install directory, as explained above, and re-run WUDT.