I found the steps from the below article:
http://www.intowindows.com/how-to-install-windows-7vista-from-usb-drive-detailed-100-working-guide/
Make sure your USB stick is big enough to accomodate the Windows 7 installation bits. And here below is the summary of steps and output on my own machine:
C:\Windows\system32>diskpart
Microsoft DiskPart version 6.1.7054
Copyright (C) 1999-2008 Microsoft Corporation.
On computer: MY-PC
DISKPART> list disk
Disk ### Status Size Free Dyn Gpt
-------- ------------- ------- ------- --- ---
Disk 0 Online 37 GB 0 B
Disk 1 Online 189 GB 5120 KB
Disk 2 Online 15320 MB 0 B
DISKPART> select disk 2
Disk 2 is now the selected disk.
DISKPART> clean
DiskPart succeeded in cleaning the disk.
DISKPART> create partition primary
DiskPart succeeded in creating the specified partition.
DISKPART> select partition 1
Partition 1 is now the selected partition.
DISKPART> active
DiskPart marked the current partition as active.
DISKPART> format fs=ntfs
100 percent completed
DiskPart successfully formatted the volume.
DISKPART> assign
DiskPart successfully assigned the drive letter or mount point.
DISKPART> exit
Leaving DiskPart...
C:\Windows\system32>e: (E: drive is where the Windows 7 installation bits are located)
E:\>cd boot
E:\boot>dir
Volume in drive E is GRC1CULFRER_EN_DVD
Volume Serial Number is F0D7-C053
Directory of E:\boot
03/22/2009 08:37 PM <DIR> .
03/22/2009 08:37 PM <DIR> ..
03/22/2009 08:37 PM 262,144 bcd
03/22/2009 08:37 PM 3,170,304 boot.sdi
03/22/2009 08:37 PM 1,024 bootfix.bin
03/22/2009 08:37 PM 97,280 bootsect.exe
03/22/2009 08:37 PM <DIR> en-us
03/22/2009 08:37 PM 4,096 etfsboot.com
03/22/2009 08:37 PM <DIR> fonts
03/22/2009 08:37 PM 484,928 memtest.exe
6 File(s) 4,021,240 bytes
4 Dir(s) 0 bytes free
E:\boot>bootsect.exe /NT60 G:
Target volumes will be updated with BOOTMGR compatible bootcode.
G: (\\?\Volume{396ea864-1e62-11de-a02a-000c76b0f5c0})
Successfully updated NTFS filesystem bootcode.
Bootcode was successfully updated on all targeted volumes.
If "could not be locked" & “Access denied” error happens, try this command: bootsect.exe /NT60 G: /force
Then copy all files from DVD to USB, and there you go!
