excellent and instructive!
so, the end of it was thusly:
- ran the HP util and it did as you say, reformatting the whole 8gb SD card [which was sitting in a Targus USB mount]
- copied the .iso to the drive
- attempted to force the x120e to boot frm that device
- failed. it tried gamely, but failed, returning to the "gimme a valid bootable" menu
- after previous fails, I thought... maybe the hp thingy did some good in other ways, and tried one last shot at the Microsoft utility for making things bootable/installable for Win7. This time: SUCCESS! - took a really long time but redid everything with the .iso file to make the drive do its job
- reboot, pointed to the device, and successful install.
Activated and now doing 4 million win7 updates.... sheeesh.
for the record, to help future searchers: a friend tells me that there IS a way to boot from the included SD slot on the thinkpad x120e - I tried and failed, punted to USB instead, but he succeeded. My guess is that a later BIOS flash enabled that to work properly.
not a bad little notebook, by the way. I bought 6 months old, still under warranty, for 300 bucks and in good condition otherwise.
Done! now what?
the HP formatter did the trick, all 79@### bytes...
so... do I just simply copy the iso on there and give it a shot? guess so -
I simulated your conditions on my 8GB pendrive - one 4 GB NTFS and the rest orphaned

- and tried HP formatter and it formatted the whole 8GB. So I knew that it should work with the SD card too. Thanks for confirming. ( I was just getting my stuff ready to do it on a 8GB SD card and by that time you confirmed.)
Regarding putting the Win7 ISO, well, I have not tried it on an SD card. I had actually used the Microsoft tool and the pendrive and not sure whether it will recognise the SD card and write it on to it. You have to try.
I know that one can also use the Universal Installer
Universal USB Installer – Easy as 1 2 3 | USB Pen Drive Linux can write the ISO to a pendrive but on an SD, well, again you have to try.
But I presume that it should do it on the SD card too.(Past midnight here. hitting the sack.)