I have used Boot Camp to create a bootable usb of Windows 7. But when I hold
Option to select the drive all I get is my Mac OS and the restore drive or whatever it is.
Shouldn't Boot Camp create the USB to be bootable? Am I doing something wrong?
There is an alternative method to
Unetbootin allows you to create bootable USB drives from many Linux distributions and also ISO images. (note that Unetbootin requires admin privileges) The following image demonstrates how to manually select the ISO image. Click the "..." button to browse for your image.
To boot from your USB drive, I recommend rEFIt. I use it myself to boot from an Ubuntu partition on my external hard drive that I use as a Time Machine on another partition. It is useful for recognizing operating systems installed on your computer and devices connected to your computer (and their partitions). I recommend simply burning rEFIt to a CD/DVD to boot to the Windows 7 install USB. Having had trouble trying to install it to the Mac itself (without the DVD), I usually boot to the rEFIt DVD, and continue to boot to my choice of operating system.
(boot to a rEFIt DVD by holding down the C key [or the option key, as you stated] after you hear the chime of the startup)
I know for a fact that Unetbootin works for creating bootable Windows install USB's (I've run them before on PC's). I will test booting from rEFIt and update this answer when I have.
For some MacBooks with disc driver, boot from USB with OS other than MacOS X is not allowed. If you really cannot use CD, you may try follow http://www.hongkiat.com/blog/install-windows-on-mac/ to install Windows with disc image.
"If you use Boot Camp, you may not be able to boot natively into supported versions of Microsoft Windows XP or Windows Vista operating systems installed on external USB hard drive." - https://support.apple.com/en-us/HT201663
For a drive to be Bootable by Intel Macs, it must be formatted with the GUID Partition scheme.