There's a lot of tutorials on "How to install Windows 7 via Pendrive".
Most of them are little bit complicated.
My Tutorial is an Easy-To-Do.
This tutorial i've made myself, tried on my own PC and worked well.

To create a bootable USB Pendrive you need the following things
    # Pendrive 8GB Atleast
    # Windows 7 bootable discimage (.iso)

1st Step:
Format your Pendrive in FAT32 format. (in many other tutorials i've seen that they instruct to format in ntfs file system, but there's no need, i've tested on my own)

2nd Step:
Grab an .iso DiscImage of Windows 7. Should be bootable .iso Image (You will find this easily in the Internet).
You can create a bootable .iso from a bootable Windows 7 DVD using Alcohol 120%

3rd Step:
Unzip the .iso Image using 7-zip or Any other Compression utilities like Winzip, WinRar.
Also You can Copy All the files from Windows 7 DVD Media to FAT32 formatted Pendrive. & Skip Step 4

4th Step:
Copy all the unzipped files in the Pendrive Root folder. Dont put it in a folder otherwise it'll not be bootable.

5th Step:
After copying finished its done now. See checklist if these files & folders are present or not (screenshot below). In some cases additional files & folders may be there such as "Windows 7 Activators", "Softwares"

And You are Done . You have successfully created Windows 7 Bootable Pendrive.
Read further below on "How to Install Windows 7 via Pendrive"

How to Install Windows 7 via Pendrive

There's a many reasons that one might want to install Windows 7 via Pendrive like
    DVD +RW Drive defective or faulty or not working  (as happened in mine, i didn't go for changing it, i just figured alternative way)
    No Optical Drive (most of the Netbook comes without Optical Drive, then Pendrive is the only way around)
    Moreover Installation via Pendrive is faster than normal installtion via DVD installation media.

So, what are the steps? Please follow the steps mentioned below. I tried with my best to keep it simple

    You need to create a Windows 7 Bootable Pendrive.
    Follow the post the Learn "How to create Windows 7 Bootable Pendrive"

    Shutdown your PC. Insert your USB key
    Then Boot from your USB. You must be thinking how to boot from your USB? Don't worry, i'm all here to help you. Choose Boot Options by Pressing Function keys (F9, F2, or Esc key depending upon your motherboard)
    After then installation window appears it is same as DVD installation media except that Pendrive installation is a bit faster.