Step by step is rather long to type out, so I'll leave you with this link that does a great job of leading you through the steps. NOTE: Make sure you have a USB drive that is large enough, the free 2 gig sticks a company gave you with their logo is not going to be enough ;-)
Method 2 in the link has directions on how to do it after downloading the windows 7 iso. If needed, you can take a look through YUMI, but if you have a legit copy, you should be able to download the iso from Windows directly.