I've just put together a system and I'm having trouble installing an OS.I've built PC's and setup a fresh install of windo

The DVD is bootable, it works on an other machine.

I only have a USB ext HD and I have backups of work on there that cannot be lost. If I could add a bootable install OS on there without loosing my files I would, but I don't know how (it's currently a NTFS format HDD)

There is a setup DVD that came with the mobo but instead of doing what it says in the manual, it only takes me to freedos.
 
You could have a bad DVD drive. I've encountered them with laptops and desktop. If you have a drive that does boot in another machine, try putting that drive into your new build. An external USB DVD drive will help. Could also be a bad memory module. Remove all memory but one stick.