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When I go through the bootcamp process, then get to the windows 7 setup screen. I format the bootcamp partition like the instructions say, then click next with that highlighted and get the error:

Setup was unable to create a new system partition or locate an existing system partition.  See the Setup log files for more information.

I'm on a 15" Macbook Retina. I do NOT have any: External Drives, other USB Drives plugged in.

The only thing I have plugged in is the USB with the Windows 7 Setup files.

I had this same issue when trying to install windows 7 via usb on my Desktop (moving to a SSD) but I was able to go around that issue by just installing from the current installation on the HD. Obviously I can't do that here.

Do I need a specific kind of USB stick? or what should I look for?

Update Checking the logs from the command prompt I see a bunch of errors: Couldn't find boot disk on the bios based computer

I believe since my USB stick is capped at 480mb/s (based on the sys info) I'm using a USB2 stick and I've swapped sides.

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up vote 1 down vote accepted

Lots of potential gotchas are mentioned here:

Including the type of stick (USB 2.0 vs. USB 3.0), the port its plugged into, etc.

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The problem was just the USB stick. It was USB2.0, I bought a new 8gb 3.0 and also when I went to make the USB stick I had it download the latest updates as well. – Doug Oct 30 '12 at 15:41
Using a different USB slot worked for me. – Richard Jan 17 '13 at 14:50

Try this:

Go back to OSX and delete the W7 partiton with Disk Utilities and Re-run the Bootcamp assistant. When you get to that same spot you should have 4 partitions, a small one, a large one, a small one, and empty (unformatted) partition for w7. Format that large partition (its one of the options for the partition) and choose that partition for installation.

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