WinUSB Maker, developed by Josh Cell Softwares, is a free utility that makes bootable USB drive not only from ISO images but also file folder that contain the Windows setup program. It’s essentially a tool to dynamically make any removable devices as bootable with Windows Setup.
It’s also portable that doesn’t require an installation process. All you need is download, extract, and launch. Note that the downloadable file is wrapped up in 7z format, which you can use 7-Zip to decompress.
WinUSB Maker works in Windows 8, 7, Vista, as well Windows Server 2008, on both 32-bit and 64-bit. The executable file is only 3K, so it’s fairly small to sit in your toolbox.
It’s an alternative to Microsoft’s own Windows 7 USB/DVD Tool, with an extra feature that you can make the bootable device from a Setup Folder.