What a joke....why not give people a ISO ? Can anyone confirm they have done a clean install with the download version ?
There is a way to create an image file despite receiving this error we seem to be all receiving.
1. You will need to use an additional Microsoft command-line tool, called Oscdimg.
Download the .zip file and extract it. Then cut and paste the Oscdimg.exe file into your C:\Windows\System32 directory
2. You now need to start up your command prompt, which can be done by Start->Run then enter 'cmd' into the prompt.
3. You should now have the command prompt open, now you need to use the Oscdimg tool to create the image, by entering the following:
Oscdimg.exe -u2 -bC:\<YOUR DIR> \expandedSetup\boot\etfsboot.com -h C:\<YOUR DIR> \expandedSetup C:\<YOUR DIR> \Win7.iso
For example: Oscdimg.exe -u2 -bC:\Users\James\Downloads\expandedSetup\boot\etfsboot.com -h C:\ Users\James\Downloads \expandedSetup C:\ Users\James\Downloads \Win7.iso
It will now scan the source tree then begin creating the image. PLEASE note: you must replace '<YOUR DIR> ' appropriately as to where you have downloaded the files.
4. You should now have an image file, called Win7.iso, in the same directory.
5. You can now burn this .iso file to a blank DVD using appropriate software. I personally use PowerISO (You dont need the paid version to burn the image)
6. Viola! You have your not so shiny Windows 7 disk. Restart your computer and install away!
- I take no acknowledgement for this, I dug about and found the info at: http://www.sevenforums.com/general-discussion/30470-make-bootable-iso-student-d-l.html