I never choose iso, I choose usb and I have never had a problem. It formats the drive and puts all the files on it. It's bootable out of the gate. And if you ever have driver issues you can load the drivers directly in the drive choice screen during windows install.No, you must use a USB. Not sure if the image creation tool would format the USB itself since I always use the build ISO option and burn it to an USB using Rufus.

