How can I mount an ISO Image in Windows 7 WinPE?

I have a 16GB USB flash drive that I want to set up like this:

• It boots WinPE

• It has useful diagnostic and system maintenance tools

• There are several .ISO files of operating system install DVDs on the flash drive

• I can mount one of the .ISO files and start an OS install.

Perhaps there's a way I can use Virtual CloneDrive within WinPE?

Maybe you can try ImDisk. I've used this to install Windows 7 from a USB disk where Windows wouldn't install if it did not see its files on a DVD. I used the steps here to install the driver from the command line.

If all you need to do is install the OS you could use Diskpart to partition the drive, ImageX to copy a custom .wim file to the partition and BCDboot to copy boot information to the system partition.

Check this out for more info.