Q: How can I install windows with an ISO file?

ISO is a carbon copy of an optical disk there are 1000's of free programs which will make optical disks into iso files and will burn iso files to get the org disc

you can read more about iso files here

http://en.wikipedia.org/wiki/ISO_image

There are specific Mac models that directly support ISOs. Boot Camp: Creating an ISO image from a Windows installation DVD - Apple Support and Boot Camp 5.1: Frequently asked questions - Apple Support

Can I install Windows from an ISO image?

To find out if your Mac supports that feature, open Boot Camp Assistant, then click the Continue button. If you see a checkbox labeled “Create a Windows 7 or later install disk,” your Mac can install Windows from an ISO image.

VirtualBox is free, and works quite well. Or you can burn the ISO image to an actual disk and use that to install it in boot camp.

If your Optical drive is working, you can always use Disk Utility 12.x: Burn a disk image to a CD or DVD to burn physical media.

Virtualization products and Bootcamp have different levels of access to hardware, so it should be a consideration for the installation.