After some experimenting with copying the iso file to following folders it worked (still got errors that it could not get latest version):
- C:\Program Files (x86)\Boot2Docker
- C:\Program Files\Boot2Docker
- C:\Users\user_name\.docker\machine
- C:\Users\user_name\.docker\machine\cache\
Following happened:
Running pre-create checks... 
(mymachine) Unable to get the latest Boot2Docker ISO release version:  Get https://api.github.com/repos/boot2docker/boot2docker/releases/latest:
  dial tcp 192.30.253.116:443: connectex: A connection attempt failed
  because the connected party did  properly respond after a period of
  time, or established connection failed because connected host has
  failed to respond. Creating machine... 
(mymachine) Unable to get the
  latest Boot2Docker ISO release version:  Get https://api.github.com/repos/boot2docker/boot2docker/releases/latest:
  dial tcp 192.30.253.116:443: connectex: A connection attempt failed
  because the connected party did not properly respond after a period of
  time, or established connection failed because connected host has
  failed to respond. 
(mymachine) Copying C:\Users\user_name\.docker\machine\cache\boot2docker.iso to
  C:\Users\user_name\.docker\machine\machines\mymachine\boot2docker.iso...
(mymachine) Creating SSH key... 
(mymachine) Creating VM... 
(mymachine) Using switch "DockerNAT" (mymachine) Creating VHD
...
From the Output of docker machine:
(mymachine) Copying C:\Users\user_name\.docker\machine\cache\boot2docker.iso to C:\Users\user_name\.docker\machine\machines\jit-dev\boot2docker.iso
I conclude that the correct install location of the Boot2Docker.iso Image is under:
C:\Users\user_name\.docker\machine\cache\boot2docker.iso
Side note: that the machines are separated by user name on Windows. Having the machine installed on one user does not mean it is available for others.