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ISOs are read-only files, so that wouldn't serve your purposes even if it were possible to convert a disk image to an ISO, but to my knowledge it isn't. And even if THAT weren't all a problem, unless you have a very high-end flash drive, the performance of this solution would be horrible because most flash drives have solid read speeds but terrible write speeds. The only exception is Windows To Go, but that requires special preparation, enterprise licensing, and a relatively rare fixed disk class flash drive.
CONVERT IMG FILE TO ISO OFFLINE
(An additional complication is that Windows will not make VSS snapshots of volumes residing on removable storage devices, which would make imaging within Windows more difficult because the volume would have to be taken offline during imaging.) Although even if that weren't a problem, if you're trying to create a Windows system that you can boot from a flash drive, that won't work anyway because Windows does not allow itself to be booted from USB devices, even fixed disk class devices. Nick posted somewhere else that there's something about the geometry and block sizes of removable storage devices compared to fixed disk devices that makes Reflect's image file incompatible with the former, and therefore almost all flash drives. You can't use Reflect to capture images of or restore images to removable storage class devices. The vast majority of flash drives present themselves to the system as removable storage class devices, as opposed to fixed disk class devices, the latter of which is what hard drives and SSDs use.