So I have got Win7 Ultimate (32-bit) installed and running on my C: drive. Now I want to install Win7 Ultimate (64-bit) on my D: drive. Both C: and D: are NTFS.
The tricky thing is that my machine's DVD drive is malfunctioning and I don't have any USB drives readily available. I do have Win7 (64-bit) in the form of an ISO image on my disk. Is it possible to setup Win7 (64-bit) on my D: Drive directly from this ISO (by maybe extracting it to a folder) without using any DVD or USB drives?
No not in the general sense. You can't just extract a Win7 ISO to install it.
One thing you could do is to install Win7 through a virtual machine (VMWare) onto a physical disk and then try booting the D drive outside of the VM after the install is finished. The results may not be ideal but it should work to an extent. It is an entirely unsupported method and unorthodox but may be your only solution outside of setting up a PXE install or buying a new DVD drive (you could get a new drive for ~$20 or less).
I also cannot vouch that this works as I have not tried it. As mentioned in comments, you are going to run into a potentially unworkable driver re-initialization problem since none of the device drivers will be the same. If Win7 cannot recover from this on it's own, you may be out of luck.
Can I run a 64-bit VMware image on a 32-bit machine? | Stack Overflow
How to Install 64 Bit Guest OS on 32 Bit VMware Workstation | Sysprobs
I've done this successfully with Ubuntu and can switch between virtualized and full hardware booting.
The simpler and cleaner method however is to get a external USB DVD drive or USB flash drive and either burn Win7 to a disk or set up the flash drive to be a bootable Win7.
