Yes there are ways of creating the USB drive without an official Microsoft ISO.
Note also when I say USB drive I mean a 4 or 8GB (I know my Win 7 64-bit w/ SP1 pre-installed ISO is -just- too big to fit on a 4GB drive) USB thumbdrive/memory stick/jumpdrive. No point in dedicating your 500GB external to a Windows installation drive
You can use any XP and upwards machine to make the USB bootable using DISKPART to format the USB drive and BOOTSECT to write a boot loader to the USB drive. (This tool is found on the Windows installation disk) Then simply copy the contents of the Windows Disk to the USB drive.
No third party tools are necessary.
I use method 3 on this link myself:
http://www.wikihow.com/Create-a-Bootable-Windows-7-or-Vista-USB-Drive (This will also work for Windows 8/8.1 just fine)
The link also tells you how to create an ISO file from an existing installation disk if need be. The USB drive does not have to be made on the machine you are installing it to, it can be made on any machine, and used again and again. You can also delete the ei.cfg in the 'sources' folder which will remove the specific versioning of the installation, meaning you will get a choice of OSes to install. (Home Basic, Home Premium, Pro, Ultimate) You will still have to install the version that you have a key for, but it is an excellent tool to have in case you ever need to reinstall a machine that you don't have a disk for.
If you do choose this route, remember to install from a USB 2.0 port and not a USB 3.0 port as most USB 3.0 controllers need an additional driver installed before Windows (and consequently the Installer) can work with them correctly.
I also have to agree with the others though. Unless the machine is needed ASAP, get them to save for another week or two and potentially get better hardware.
I do still stick to my opinion that optical drives are no longer a big deal. There are several digital distribution methods for buying games and simply downloading them to your machine, and these are usually a lot cheaper than buying them in-store. (Steam, Origin, and HumbleBundle to name a few)
Personally I have not needed to use a CD/DVD for a very long time, with most TVs these days supporting media from USB devices, easier networking for home users with Homegroups and digital distribution they have been unnecessary.
Too right
Trying to shave 40 bucks off of a $1600 build is just friggin goofy anyways...JMHO...