Windows 7 Installation on Netbook

Did you try create a bootable USB?
You can find it below:

USB Windows 7 Installation Key Drive - Create

Yes I did that before I bought the external optical drive. It still asked for me to point it to a optical driver, even with USB.

Probably you may be able to resolve the issue by changed mode for your disk controller in the BIOS.
Please, check your option there and try change to other (SATA/AHCI/IDE)

If it's prompting for a driver then it's almost always a bad installer.

Start over with the ISO from Step 1 and tool in Step 2 of Clean Reinstall - Factory OEM Windows 7, then follow those steps closely to get and keep a perfect install.

Make sure you're booting the installer, all other HD's and peripherals are unplugged, at the first screen press Shift + F10 to open a Command Prompt, then run Diskpart Clean Command to get the cleanest slate for reinstall.

If your netbook has UEFI BIOS then you'll need to follow the special steps for UEFI (Unified Extensible Firmware Interface) - Install Windows 7 with - Windows 7 Forums and UEFI Bootable USB Flash Drive - Create in Windows. If there are no UEFI settings in BIOS setup, then set the SATA controller to AHCI.

I'm working with a Dell Latitude 2100
Enterprise Class / 2GB RAM / 80gb Harddrive / Intel Atom
BIOS version AO4

With 2gb RAM I'd use WIn7 32 bit for your licensed version.

Drivers are in the installer and quickly updated when you run all rounds of Important and Optional Windows Updates. Plug in by wire and have your network adapter in your backup in case you need to install it to get online to do Updats.

Yea it's a netbook so It's 32 bit anyways. And yea I'm going to do that and try your suggestions once I get home from work. Thanks for your help so far! :)

I was able to solve my problems following gregrockers post. Thanks all.