1. Run grubinst_gui in Administrator mode
  2. Select the USB disk under Device.
  3. Click Refresh on the Part List, and select Whole Disk (MBR) (if that fails, redo using partition - both are tested to work)
  4. Click Verbose output and Don't search floppy 
  5. Click Install
  6. Copy grldr to the USB disk
  7. Copy the 2 Windows 7 ISOs to the USB disk and rename it appropriately
  8. Create a menu.list file like so:

title Windows 7 32-bit Repair
map --mem (hd0,0)/W7-32R.iso (hd32)
map --hook
chainloader (hd32)
boot

title Windows 7 64-bit Repair
map --mem (hd0,0)/W7-64R.iso (hd32)
map --hook
chainloader (hd32)
boot

The rescue USB can only be used to repair Windows 7 systems, not install Windows 7.