1) download and install "linux live usb creator" from this link http://www.linuxliveusb.com/
2) format the USB drive with FAT32. open that application and follow the steps mention on that application to create bootable usb drive. it's better un-tick the "Hide created file on key" from options. it will helpful to view all created files on the USB later.
you can test the USB using "mobalivecd" application. link is http://mobalivecd.mobatek.net
3) I have faced the following error message in the middle of the installation
Missing ISO 9660 Image
The installer has tried to mount image #1, but cannot find it
on the hard drive.
Please copy this image to the drive and click Retry. Click
Exit to abort the installation.
4) Solution for that error message is putting a redhat iso image into the USB drive.this is crazy but it's only solution i have found so far and it's worked :) .
5) Restart your pc and change boot method to USB
6) Follow Redhat installation steps. after you select the "install or upgrade an existing system" from the menu.
you may get a blinking cursor screen for 10 to 15 mins.pls be patient :-) .
7) Select "Language " , "key borad" according to your preference. once you got the "Redhat installation method" screen make sure to select "Hard drive"
8) Click "ok" and then you get an screen similar to the following
it will display all devices connected to your pc. for an example
/dev/sda1 <-- hard disk partition 1
/dev/sda2 <-- hard disk partition 2
/dev/sdb1 <-- USB drive
select your usb device.it's depend on your system , according to above example it is /dev/sdb1 . and click "Ok" to continue.
9) Follow rest of the steps, and install the Redhat Linux !.