installing windows 7, issues.

[lopt]

Question/Problem:

I am hoping someone out here can help me. 
My room mate's computer was recently murdered by a virus. All the files are gone and the whole thing is a mess to turn on. It gets to the desktop, and you can run things that get plugged into it, but otherwise, it's unusable. 
She left her windows xp cds in Japan, and so we went and got Windows 7, whatever, it's better anyway. Only later did we realize that her computer, a netbook, does not have an cd drive.
Since we had the tangible discs in hand and no external cd drive, I created an .iso from the discs and then followed these instructions: http://windows.microsoft.com/en-us/windows7/installing-windows-7-on-a-netbook for the USB. It works fine, I run a custom installation, yadda yadda. The trouble starts when I get to the screen that should be asking me where on the computer I want to install 7 onto. I get the error: 'Device Driver not found' and cannot do anything further.
Why is this and how do I fix it? Is it my .iso? Is that corrupted? Please keep in mind that I cannot change the set up in the BIOS because the key to save the changes doesn't exist on her keyboard. (You have to press 'end' to save changes, it's not there). So I cannot actually change the boot order.
We want to leave for our last resort the tech shop to ask for help. 100$? Are you kidding me?

Operating System, Version and Service Pack: Windows XP, not sure of Service Pack, cannot check. Want to upgrade to 7.

Web Browser and Version: Irrelevant.

Your level of experience (we simplify or explain instructions based on how you answer): Probably intermediate but explaining things slowly would be cool.

When did the problem start? Has it been going on constantly since then? N/A

Any steps you've taken to troubleshoot? Google, but that is not helping.

If you are receiving an error message, please include the entire text of the message. (If you have an error log, please post it under a LJ-Cut):

Early thank you for the help. :)