Cannot create Windows 7 install disc

I have been trying to install Windows 7 on a 13" MB (late 2008) model with Lion installed and all software updated. I am using Bootcamp, but cannot get the MB to create a partition and read from the iso image on the DVD. I don't quite understand why the "Create a Windows 7 install disc" tick box in Bootcamp is greyed out - I have tow other options, "Download the latest Windows support files..." and "Install Windows". I have downloaded the support files and put these on a DVD, but I can't see how to create an install disc.
I have tried creating a partition of 40GB in BC and then clicking "Install" when the DVD is in the optical drive, but even though the DVD spins up, I get: "the installation disc cannot be found....." Hence the reason for seeing if I could create a USB installation disc.
Any help please?

 

Yes, it is. However, I've just done some research and I am not now sure that my MB (late 2008 model) will accept a 64 bit Windows 7 disc. I do not have a 32bit version.