The first step is to locate the ISO file

WIndows tools are never bullet proof so what I did it's make my usb bootable using command prompt , follow this:
Coming back to bootable USB guide, here we assume that you are using either Vista or Windows 7 to create a bootable USB.
1. Insert your USB (4GB+ preferable) stick to the system and backup all the data from the USB as we are going to format the USB to make it as bootable.
2. Open elevated Command Prompt. To do this, type in CMD in Start menu search field and hit Ctrl + Shift + Enter. Alternatively, navigate to Start > All programs >Accessories > right click on Command Prompt and select run as administrator.
3. When the Command Prompt opens, enter the following command:
DISKPART and hit enter.
LIST DISK and hit enter.
Once you enter the LIST DISK command, it will show the disk number of your USB drive. In the below image my USB drive disk no is Disk 1.
4. In this step you need to enter all the below commands one by one and hit enter. As these commands are self explanatory, you can easily guess what these commands do.
SELECT DISK 1 (Replace DISK 1 with your disk number)
CLEAN
CREATE PARTITION PRIMARY
SELECT PARTITION 1
ACTIVE
FORMAT FS=NTFS
(Format process may take few seconds)
ASSIGN
EXIT

I thought this was allow me to run Windows 8 on a PC or laptop via a flashdrive. But this is just to install Win8 itself.

I tried this program about 2 weeks ago - it doesn't work. Something with the IMG file that Microsoft creates. I get an error, "Error, cannot create vdisk.". No error logs or any other information is available. Dunno why this IMG file is any different - but it is. My question really is WHY did Microsoft have to change formats and what about this change is not allowing it to be converted (short of burning it to a DVD, then re-ripping it as an ISO).