I have MacBook 4,1 early 2008 and i've made usb bootable (in bootcamp created with iso) and once i reboot, i get "No bootable device -- insert boot disk". After some search, i installed "rEFIt", and when i reboot, and selected my usb, i get the same message. I found answers that says i need disk, not the usb, but i belive there is a way to install windows from usb. Currently i'm running windows 7 on virtualbox and it's very slow because i have 2gb of ram.
You will not be able to install Windows 7 on a 2008 Mac by using a USB flash drive containing files from the ISO.
The solution would be to burn the ISO file to a DVD, then install using the DVD.
If you do not have a working optical (DVD) drive, the you can use the solution given here.