Thank you for the rapid response.
Did you try starting up with the Windows 7 Disk in the DVD?
Yes, though it is in the external drive as the macbook air does not have an internal drive.
If Windows Installation DVD (or Bootable USB) is connected to your iMac you should be able to start up and hold down the OPTION key at the chime. Select the DVD (or Bootable USB) Icon and start from there.
Tried this as well. With it connected and holding option, it does in fact register the disk as a windows disk, however, after selecting it, I get the same error: No bootable device ...