Make sure that the proper USB drive is selected and hit "Continue". Et Voilà! The ISO gets "burned" to a bootable Flash drive. Now, read the rest of the instructions given in Step 1 above ("Setting up your Boot Camp partition").
Create a bootable Windows Setup USB using Windows 7 USB/DVD Download Tool (All Macs): The easiest way to create a bootable Windows 7/8 Setup USB Drive is with Microsoft's own "Windows 7 USB/DVD Download Tool". Download it, select an ISO and the target USB drive -- and you're done!
(Hint: If the USB thumb drive isn't recognized by your Mac bootloader or rEFIT, try creating the installer using USB Creator -- and if all fails, the manual route should definitely work).
Create a bootable Windows Setup USB using Terminal commands (All Macs): If no PC is in visible range, the USB/DVD Download Tool won't do you much good - in that case, you'll have to work your way to the command line:
1. Open a Terminal window and run "diskutil list". Determine which device node matches your USB thumb drive (e.g. this could be "/dev/disk4").
2. Unmount this disk by typing in "diskutil unmountDisk /dev/diskX" (where X stands for the number of your USB drive -- in our example, it would be "diskutil unmountDisk /dev/disk4").
3. Type in "sudo dd if=/PATH/Windows7or8.iso of=/dev/diskX bs=1m". Make sure to replace the "/PATH/Windows7or8.iso" with the correct path of your Windows 7 or 8 ISO file and, again, replace the X with the drive number.
4. Done! Once the operation is complete, run the "diskutil eject /dev/diskX" command to eject the flash drive!
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