Couldn't find Boot disk error while Installing Windows 7 using USB

As you're unable to get to installer's Custom>Drive options to create a partition, use Step 2.2 in tutorial SSD / HDD : Optimize for Windows Reinstallation to create a Partition and mark it Active to see if installer sees it.

Using the partition you've created with Diskpart, boot the DVD, press Shift + F10 at first screen to open a Command Line then run Disk Check with /r switch.

It is rare that it's needed with Win7, but I would try loading SATA controller driver here to see if it sees HD.

Verify the BIOS detects the HD correctly. What are the settings given for HD? I've already given you the step to set SATA controller to AHCI first with no feedback - steps cannot be skipped if you want to move forward and not dither.

There was some problem with installing windows using USB on this particular system. Ofcourse, I cannot tell the exact problem as I do not know. I thought of removing USB drive out of picture and now I am installing windows as I write this post. Here is what I did.
1. Booted from the USB installer and pressed SHIFT+F10
2. executed the "clean" command in diskpart
3. created a 5 GB fat32 partition and assigned a drive letter using "assign" command
4. copied the usb flash drive contents into the newly formed partition using xcopy
5. rebooted the system with the 5gb partition in my HDD as the boot location

rest all is the normal process.

Thanks everyone for your valuable inputs. But the question still remains... what was the problem with the USB installation?

signed up to Thanks you @ksr04
You saved my night! After 3 hours of trials and different solutions your's finally worked!

Signed up here to reply as well. OMG, ksr04, you are my hero. Tried gazillions of different methods to get it to install, and this is the only one that worked.

Small addition:
* created 5G fat partition as mentioned and copied all files
* rebooted from hard disk
* during set up: remove FAT partition and insert USB stick
* install Win7 the normal way.

Thanks!