kade714 - 2 thoughts here. I deploy server 2008 R2 which is similiar to Windows 7. My method works for the environment I work in which is DS here at our corporate headquarters for our data center server builds (approx 1500) and our DR site, and NO DS anywhere else (until we go to ns7x). We are a global company and are required to reach out to these locations and build servers as they have no IT folks onsite, so this method has been tried on our Asian, autralian, south american and European server builds.
1st - The hidden partition that is being put into your win7 image can be removed or prevented from happening in the 1st place, during the image creation process. This is causing the issues I saw in R2 with the same sypmtoms you described. . I'm leaving in a few minutes and wish I had time to find this info but, if your problem still exists - respond to this. I'll look that info up and get it to you.
Also - to boot from USB is as simple as copying 3 folders and 1 boot.wim file created from most usb boot creators (I used WAIK).
First format the usb drive using diskpart commands (I can send you the ones that work for me), and then copying those 3 boot folders and 1 boot.wim file to the formatted usb drive.. This then makes the usb drive bootable.
I then copy over the DS files, OS files, post OS stuff (SAV, dat files, WSUS, WinZip, Dell Open Manage) and other apps that we require on all our servers onto the formatted, bootable USB drive.
First I'll boot to the USB drive (for our remote - global locations). Once WINPE loads and at the prompt, I'll run diskpart to list my disks, locate the USB drive and then assign that drive as another letter (like Z or something). This keeps the USB drive from being C.
Then I type in one command which kicks off a cmd I wrote for our environment. Depending on which command I type, will then install the OS version I want(r032/r064/r2 as well as win2k3 OS), along with all the post OS automation, app installs, SAV, WSUS and updates, before askiing you to logon the first time. The nice thing is its all local from the USB drive so you dont have to be network connected to do a complete secure install. (except a remote console connection - easier to do on servers)
Of course your unattend (old sysprep.inf) needs to be written correctly and image must be a sysprep'ed image.
I used this method around DS previously but with Win7 /Server2008r2 - it was a big change in how MS does things.
Fortunately my company paid for an MS engineer to live onsite for 3 days and help us with the unattend file and automation thought process around the new OS.
Email me for particulars if you havent resolved your issue or if you want to try another method. It works like a charm and is a consistent image process everytime. Its as simple as shiping the USB drive to remote sites (or providing them the share with all the instructions and bits), having them connect our Dell remote access port so we have remote connection to the device, they configure the drac IP and then insert the USB drive. From there I type a couple commands and walk away for 30-40 minutes.