From Aggrandize Solutions:
This utility would convert your USB flash drive into Windows Vista or Windows 7 bootable setup disk. You can make your USB drive as bootable and setup Windows Vista or Windows 7 on any computer that supports booting from USB. Features: Setup Windows Vista and 7 from your USB disk. No more CD/DVD required for Setup. Best option for Netbooks. Reduce your setup time. Use External HDD as USB Bootable Setup Disk with v22.214.171.124. No need to format the disk each time.
It sounds like you're trying to create a system repair bootable thumb drive. That's not the intent of this utility. This creates a bootable thumb drive for installing the entire OS. When I finished, my 4GB thumb drive had a little over 200MB of free space left over.