I thank you all for your interventions and comments (indeed BOB , I should have looked / posted in the Bootcamp section, but this is all a little messy and complicated when you are not familiar of this part of the web site).
I found from various posts that I am not alone struggling with this ISO image (honestly I am not even familiar with this terminology, like many other people apparently).
Here is how I solved the problem (using your advices and comments)
Unfortunately Bootcamp 4, as available from Mac OS 10.8 (Mountain Lion) is only coping with ISO image; (apparently in line with Apple strategy to get rid of the DVD drive not provided on Mac Book Air and Mac Book Pro).
Forget trying to use the DVD drive of another computer, in target mode or remote disk, since at the time of writing is not working (Apple could have at least worked this out).
As far as I understand the ISO image is the file that is downloaded online, but if you purchase Windows on a DVD, there is no ISO image to be obtained.
The trick, that Apple could have better explained and highlighted, is to transfer the content of the Windows installation disk on a bootable USB key (thumb key).
This operation can not be performed from Bootcamp Assistant, and the USB bootable key must be available before running Bootcamp.
But this required another computer with Windows 7 installed since you need to talk in a foreign computer language that does not make sense to create a bootable USB key.
I found the procedure and explanation on the CNET forum
http://reviews.cnet.com/8301-31012_7-20020513-10355804.html
and on many other Windows forum such as here
http://www.intowindows.com/bootable-usb/
Only the part A. Getting Windows installation on the thumbdrive.
from the CNET forum article is needed.
To install Windows in Bootcamp is going rather straight forward therefater .
In Bootcamp assistant, only select the 2nd option , downloading the Windows support software (to be copied later to another USB key, so that you can run it within WIndows 7 after it is installed), and the 3rd option, Install Windows.
The first option 'create a Windows 7 install disk' is completely useless and confiusing when you only have WIndows on DVD.
In other words, if you only have Windows on a DVD, you MUST have access ot another computer with Windows already installed to create a bootable USB key.