Same issue here, but it seems I just solved it.
I tried tu burn 2 DVDs of Windows 7, but both of them showed the same error.
Before that I tried to get some of my USB Devices to boot the setup from there which didn't work either.
Now I did the following trick: The Windows DVD boots, but doesnt install. So I booted from DVD until the welcome screen from the dvd cam up and plugged in my flashdrive with the windows setup files copied on it.
The I opened up a command window with shift + f10, changed to the flash drive in the subdirectory sources and executed the following command:
setup.exe /m:f:\sources /installfrom:f:\sources\install.wim
This starts the setup from the flashdrive and specifies the install image which should be used during setup. f: is the drive letter of the flash drive.
The usb drive and the dvd is only needed during the first phase of the setup where the image is copied to your HD.
As I'm now at 56% of "Expanding Windows files" it seems to work for me.
edit:
Here is an explanation what the various command line switches do:
http://technet.microsoft.com/en-us/library/cc766446(WS.10).aspx
Message was edited by: Andy19882