Sounds like your hard drive is formatted as GPT and not as NTFS, and more than likely still has a recovery partition on it which is why you are seeing the windows 10 repair window. Reformat the hard drive, removing all partitions first, as an ntfs volume.
Now that we have a suitable place to install to, let's check the integrity of your flash drive. Try it in another computer if you can and try to boot from it. Does it boot into the win 7 setup? If not, recreate flash drive.
Here is a decent tutorial that can help.
http://www.fit-pc.com/wiki/index.php/How_to_make_Windows_7_bootable_install_USB_stick
Now we have a good source, and a good destination. Change bios to CSM, boot order to flash drive (might be listed as USB-HDD or PMAP or USB in the bios boot list). Insert the drive and try to reboot.
The GPT file system for hard drives started being used in windows 8, and continues with windows 10. It allows for UEFI (trusted source) fast boots, which offers better security measures on systems that have a bios to support it. However, it does not see windows 7 usb as a trusted source because it is not an 8/10 bootable device.