This tutorial as based on fujianabc's Reboot.pro forum post 'NT 6.x fast installer: install Win7 directly to USB external drive' and his excellent scripts (now with reg tweak by 'cdob' from reboot.pro -USBBootWatcher is no longer required).

it does not matter what is on the internal hard disk of the target system, even if the internal hard disk is broken/not working. Now allow the system to boot to Windows 7 directly from the USB drive.Select the USB drive as the boot device in the BIOS boot menu.Connect the prepared external USB drive (hard disk or Flash drive) to the target system (use a USB 2.0 port NOT a USB 3.0 port!).When you have made it, you can boot from it as follows: This tutorial does not make a Windows installer USB drive, it actually puts a copy of Windows 7 onto a USB drive and makes it bootable. For 'Removable' USB flash drives, be sure to choose the VHD option (for Win8/10) or it won't boot! NEW! You might like to try WinToUSB which make it very easy to prepare a bootable USB drive containing Win7/8/10 To Go. So now you can try Windows 7 without needing to install it onto your internal hard disk! IT WILL ONLY WORK ON A USB 2.0 PORT (see instructions at the end of this page for instructions on how to add USB 3 drivers). Please note: This tutorial enables you to prepare a USB drive so that you can boot directly to Windows 7 from the USB drive.

Universal usb installer vista