We had to install Windows 2008 R2 Server on HP ProLiant ML150 G3 server and we decide to do this booting and installing it from USB stick. We have a 4GB USB stick and it is enough.

Diskpart tool is excellent way to do this task. If you don’t have Diskpart, you can download it here.

Format the thumb drive

1. from a DOS prompt execute: diskpart
2. list disk
3. select disk 1 (assuming disk 1 was your thumb drive in the above list disk command)
4. clean
5. create partition primary
6. select partition 1
7. active
8. format fs=fat32
9. assign
10. exit

Copy the Win2008 install files

1. xcopy d:\*.* /s/e/f e:\ (assumes your dvd is drive D: and your thumb drive is drive E:\, adjust accordingly)