This post comes after spending an evening scouring the Internet looking for a solution to this very problem. I was trying to get a bootable ISO (CD) to be copied over onto a usb key and then be able to boot from the USB key. After looking around for some 3rd party utilities (BartPE, etc.) I found an article that showed how to make the USB key bootable using built in Windows utilities. It involves a tool called diskpart.exe. To use it, insert your memory key then just open a command prompt and type "diskpart". Then follow the following commands to get the partition created on the usb key to make it bootable. Then just copy over the contents of any bootable ISO or CD. In my case I used the ERD Commander utilities that are part of MSDN. Now I can reset admin passwords if I forget or lose them. Sooo SWEET!
list disk
select disk <discnumber>
clean
create partition primary
select partition 1
active
format fs=fat32
assign
exit
After I wrote this I also found the following alternate resources to read up on:
http://www.pctipsbox.com/how-to-make-a-bootable-usb-flash-disk-windows-vista-installer/
http://blogs.msdn.com/dglover/archive/2008/09/11/creating-a-bootable-usb-windows-vista-drive.aspx
and you can google "bootable usb diskpart"
Enjoy. The applications are endless.