Maybe I'm senile... but I didn't find a solution per se in this post... but another way of accomplishing the end goal... for the MS image program was written before the use of USB media... however I did find a work around.. for if you're looking to "STORE"
a System Image on USB media (when nothing else is available) use Claus' instructions to get the image on the USB media... however the MS program won't let you restore directly from USB media... so after the image is copied to USB media use the recovery media
tools to access the command prompt... Follow the instructions below if this is a
NEW replacement HDD that hasn't been initialized... Skip to step 2 if you are re-imaging same drive or have another machine to do the initializing... To avoid all this.. invest in a external HDD/SSD large enough to MIRROR your HDD then keep it in a safe place... but if your like me.. proceed with the following.. ;-)
STEP 1:
Connect your NEW out of the box HDD target drive into place... then use the Recovery tools disk/usb drive to get to the command prompt and type the following to get
source drive or format target drive
diskpart {enter}. this will take a few moments to initialize....
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If you're not sure which drive letter is the source drive use the following command: list volume {enter}
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Once you know the source drive
DISKPART> SELECT DISK n{enter}
DISKPART> ATTRIBUTES DISK CLEAR READONLY{enter}
DISKPART> ONLINE DISK{enter}
DISKPART> CONVERT MBR {enter}
This makes the disk read/write, online and with a MBR partition layout. The "CONVERT" command is equivalent to the "Initialize Disk" Operation in the Disk Management GUI.
If you use "DISKPART> CREATE PARTITION PRIMARY" in the place of "DISKPART> CONVERT MBR", the MBR initialization is done implicitly.
STEP 2:
From the command prompt you want to remember to copy the entire WindowsImageBackup folder from the source drive to your NEW or FRESHLY FORMATTED
target drive... if the folder is modified in any way before copy it won't be seen by the MS program... The directions below will help format a used HDD if you want an extra pass to insure a clean drive. Skip to Step 3 if no format is needed
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TO FORMAT THE OLD TARGET DRIVE: type DISKPART {enter}

Then type: list disk {enter}

Then type: select disk 0 -- or whichever is the used HDD target drive (pay attention, be careful not to format the image source drive)

Then type: clean (and really mean it)

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STEP 3: XCOPY
Once you have the correct drive where the System Image is stored... you'll have to move it to your HDD or an external HDD/SSD (its crucial that you don't modify the folder structure in any way or it won't work)
**c:*xcopy sourcedrive:*WindowsImageBackup targetdrive:\ /h
it should look something like this
**c:*xcopy S:*WindowsImageBackup T:\ /h
These switches have the following effects:
/E - Copies folders and subfolders, including empty ones.
/H - Copies hidden and system files also.<=================== use this one
/K - Copies attributes. Typically, Xcopy resets read-only attributes.
/O - Copies file ownership and ACL information.
/X - Copies file audit settings (implies /O).
Once copied go back to the Main Recovery Menu and select System Image Recovery..
it should then detect the image and complete the operation..
Any confusion reply back let me know.. otherwise I take no responsibility.. ha ha ha its late...