PermaLink Workaround for Windows 7 "unable to create a new system partition " error when installing from USB flash drive07/11/2012 10:25 PM
I'm surprised MS didn't fix the installer in the SP1 slipstream of Windows 7 given how common this problem seems to be if you search the web.  Most people don't have a DVD drive to install from any more and do installs off a USB flash drive.

The most common solutions people have posted are to remove any USB flash drives on your system (not an option for me since that's the one that Windows 7's installer is on) or re-order your boot order so your hard drive is first.  Neither worked for me though it might have to do w/ using YUMI for a multiboot USB flash drive.

What did work was copying over the installer files to the new drive as mentioned in Instructables.  And while I was at it, I compressed my SSD system drive following this Gizmodo tip so my Win7 install was only 7GB...every bit helps because it's the dumping ground for MS and random app files
And don't forget to tune Windows 7 for SSD use (though a lot of those tips are handled by Samsung's SSD Magician).

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Full-stack developer (consultant) working with .Net, Java, Android, Javascript (jQuery, Meteor.js, AngularJS), Lotus Domino