Troubles Installing Windows 7 via USB. Flat install?

I've been struggling with this for a while. Windows 7 64-bit Enterprise edition just will not install on my Shuttle K45 system via a USB key. It hangs out during the install while copying files or while creating the partitions. The system is pretty standard and low-tech: IDE hard drives, no CD, 2G RAM.

I am not sure what of the problem. Other than the Shuttle, I have a Apple MacBook Pro. On the MPB, I am running OS X, and Mint Linux and Windows XP over Parallels. I have an ISO of Windows 7 that works (I installed it as a Parallels VM to make sure). I have used UltraISO and the Windows 7 USB/DVD Download Tool to write it to the 8G USB key. Both seem to copy all the files correctly (with UltraISO, I asked it to verify). It boots via USB and the install looks just fine. Until it hangs, most of the time with a copying error of 0x80070241.

I am now trying to figure out if there are other ways I can install Windows 7 on this Shuttle system that has no CD drive. I've heard about a flat installation, however those all seem to be doing something from within Windows. I do have access to a Command Prompt from the Windows 7 install. Does anyone know if/how I can prep the Shuttle hard drive with Windows 7 installation and have Windows 7 install from the hard disk. I do not have an external enclosure for the IDE HD and I do not have any other system I can hook up to the hard drives. I do have an external Maxtor OneTouch drive available.

Check the integrity of the ISO

Windows 7 Enterprise x64 MSDN (en_windows_7_enterprise_x64_dvd_x15-70749.iso):

• MD5: 45D3A80E3C73A4B064FF6FEDB4E2DC5B
• SHA1: A89DCE706D527206CB464EF86ACD3A3D13A332DB
• CRC32: D4597619

Try WinToFlash to prepare the USB flash drive.