I know this is an old thread, but I got some info to add. Kougar is right, the 64bit bootsect program on the Win7 x64 iso wont run on a 32bit OS. But you can use the 32bit version to do the same thing, and then just copy the iso files to the usb drive.(you have to make it bootable as well by marking it active) I found a really helpful article on how for XP 32bit, I'm sure it could be adapted for other uses such as vista 32bit. truthactual.site50.net/64to32usbtutor.html
is the website. ATM, it seems to only have this one page lol. But oh well. This article worked flawlessly for me, I couldn't use diskpart because i have xp, and the microsoft win7 usb dvd tool wouldnt work either, and when i tried to use the bootsect it gave me the invalid win32 application error. Oh! and don't forget to set your BIOS settings to boot from usb!