The Windows 7 beta includes the ability to burn CDs/DVDs from ISO images but it doesn’t seem to be able to mount them as volumes. As this beta is supposed to be feature complete, I don’t think it’s very likely that we’ll see this functionality added in future builds (even though rival operating systems can already do it…) but there are some third party alternatives available.
Last week, I (finally) got around to upgrading my netbook from Windows 7 milestone 3 (build 6801) to the beta (build 7000) and, as I didn’t have access to a DVD drive, I used Slysoft Virtual CloneDrive to mount the ISO as a drive, after which I could select the Windows 7 setup.exe from the autorun menu. It did exactly what I needed it to and that, rather lengthy, upgrade process didn’t seem to hiccup at all. From a quick trawl of the ‘net, there is at least one alternative out there (which I haven’t tried) – PowerISO – although this is a chargeable product and Virtual CloneDrive is freeware.