Installing W7 from an external disk seems to be hit or miss even on a native Windows computer it seems. It depends on if your computer supports it or not or the moon is aligned with venus, etc.
Might try another USB input/output cable or make sure the drive is connected with an external power supply, maybe the USB port doesn't give enough juice. Some computers only have one port that puts out the full watts needed to power some external devices.
You don't give the year/model or MacOS your using so can't guess what you have or had before.
If you want to try again, if you have a USB thumb drive and have Lion (updated to 10.2 or higher) then Apple enables making a W7 USB installer drive via Boot Camp Assistant.
By the way, they do make longer USB cables.