Booting installation from external harddrive (iphone?)

Hey guys!

I finally got tired of Vista so I have decided that this be the day that I get windows 7. The computer is backed up and ready. With the small problem of having something to boot it from. I have an iso of Windows 7 Ultimate that I want to install.

I have no dvds available. The largest usb drive I have is 2gb. I do have a 1.5TB external drive with ntfs but it's almost full at the moment so formatting it is not an option. Also I have a jailbroken iPhone 4 which I've read is possible to turn into an usb drive.

And here is my canundrum. I read something about shrinking a drive but I must admit I didn't quite understand it. I have about 200gb spare on my external harddrive, is there any way of making a partition of it to boot from without screwing up the rest of the harddrive?

Also there are a couple of different ways into turning the iPhone into an external harddrive, but I suppose it's a very bad idea to start changing the file systems of a partition in order to make it bootable?

Is there any way of making this happen today? I really just want to make this happen. Any and all help is much, much appreciated!

Edit: I tried using the external harddrive as it is and extract the ISO to the root, but I get the ntldr is missing error, which is really what brought about all this chasing around for a solution.

Edit 2: The computer I have is a Lenovo computer and it comes with this 20gig partition of whatever's on there. Going to try and boot the installation from there.