Windows 7 Installation Fails at 7% Extraction on Dell

Alright, before I begin I want to clarify some points so no one wastes their time giving solutions that have already been addressed and haven't worked:

1. I am aware that this is a common error (0x80070570) on Dell machines.
2. I have changed the settings in the BIOS as suggested by both Microsoft and Dell forums i.e. changed the drive settings from AHCI to ATA.
3. The BIOS version shows as A12.
4. The processor is 32 Bit.
5. It is a clean install on a Dell XPS M1330 machine. There is no other Operating System on it.
6. The ISO file used is the same one used to install the operating system I'm on right now and it was downloaded from the official Microsoft website. It runs on every other computer BUT the Dell.
7. I'm trying to install Windows Ultimate 32 bit.
8. I have checked the Ram and there is no problem whatsoever with the hardware.
9. The computer was already running a Windows 7 Ultimate on it when I bought it but I had to uninstall it because it was a pirated version and I wanted to install the genuine one on it.
10. I have tried to only install Windows through my USB since I don't have a working DVD-Drive on me right now (that's another problem but will worry about it on another thread).

So...

1. I'm lost right now. Every time I start it stops at 7%. I'm guessing the following might be wrong:
2. The data transfer between the USB and the HDD isn't doing alright, and it stops at 7%. But if that's the case, then how can it boot from the USB and also copy upto 7% in the first place?
3. If the USB is the problem, and seeing that I do not have a working DVD drive, can I install Windows by copying setup files from the USB to the HDD? If so, how do I go about doing that? I can get to the command prompt when I boot from my USB. What do I do after that?
4. Would changing the install from Ultimate to Professional or Home or something help? I only have the key to Ultimate, but I can install it without the key for a little while if that would fix the problem.

Any other suggestions?

I do not have any technical background. Whatever I've tried, I've done it after reading it online, so I would really appreciate a detailed explanation. I've read other entries on here as well, but they haven't helped solve my problem.

http://www.instructables.com/id/Install-Windows-7-without-USB-or-DVD-without-upgra/ has step-by-step instructions on copying Windows setup files to the hard drive, making it bootable, and installing Windows 7. From the site:

How to CLEAN Install Windows 7 directly from Hard drive – NO DVD or USB needed!!

For example, you have a netbook or desktop that you want to install Windows 7 onto, but can’t use DVD or USB for whatever reason (or don't want to, like me). This method will allow you to boot and install Windows directly from the hard drive. This guide involves plugging the hard drive into another working computer, preparing the hard drive, placing it back in the system, and installing Windows as usual.