I think you should create Windows 7 Portable.
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Do you mean a Win & Installation onto a USB stick or to be able to install it form a usb stick?
If the latter Microsoft already has the directions to do so at http://store.microsoft.com/Help/ISO-Tool
If you want to run 7 from a stick you can provide all who download it with a valid key?
“Be who you are and say what you feel because those who mind don't matter and those who matter don't mind.” Dr. Seuss
Portable Windows created on a base of WinPE does not need a key, but even so, surely distribution of portable Windows is illegal.
When building Portable/LiveDVD/LiveUSB Windows on a basis of Windows Automated Installation Kit (AIK) with the help of WinBuilder, for example, one is still bound by the AIK and Windows license terms, which should be carefully examined.
Title says it all
“Be who you are and say what you feel because those who mind don't matter and those who matter don't mind.” Dr. Seuss