Installing Ubuntu from usb pendrive on hard disk
Yes it is possible to create bootable USB from an ISO within Windows. It is not exactly by copying an ISO to the USB key, however it's almost as simple. The instructions are located here: How to create a bootable USB stick on Windows | Ubuntu
Afterwards you can boot from the USB as if you booted from a CD and proceed to install Ubuntu on your hard disk.
Yes, its possible. There are two ways of installing Ubuntu in pendrive.
Completely extract the Ubuntu ISO to the pendrive using Universal Linux Installer. Check the link for complete step by step guide.
You can copy the ISO file to the Pendrive and boot it using GRUB4LINUX. Its complicated to setup and need lot of more effort compared to first one.