I recently had to install Windows 7 on a laptop where it would refuse to boot the installer from my external USB DVD drive.
The solution was to make a USB boot capable Windows 7 installation drive.
Microsoft now provides a tool (also I have kept a copy on this wiki) to automate the steps for you provided you make or already have an ISO of the Windows 7 DVD and meet the following criteria.
Requirements
After that it's point and click.which are quite straightforward.
Just in case the site goes down, I have put a copy of the tool downloaded Nov 9, 2010.
Not really necessary anymore but there are various articles at,
Into Windows which I have followed succesfully and Kevin's Blog.