It sounds like what you are asking is whether you can install from the raw Windows installation files rather than from a disc-image.
This was definitely possible with older versions of Windows (at least up to Windows XP). You could copy the contents of the CD to a hard-drive (e.g., from d:\i386 to e:\winxp\i386). Then you could install it by booting into DOS and running e:\winxp\i386\winnt32.exe.
Unfortunately, it is not the same with Windows Vista and up. They use a different method of installing which is more complicated and requires booting from the installation media.
It is possible to install Windows 7 without a disc, but it is not easy. Basically, it involves creating a separate partition on the installation drive, extracting the installation files from the disc, “burning” the installation files to the new partition, and modifying the boot order to boot from that. It’s fairly complicated and intrusive and probably not what you want.
It is probably easier to either burn a DVD+R(W) of the image or “burn” a USB flash-drive installer.