Issue in Installing Win 7 over Win XP

Hi All,
I got a AMD Turion Lenovo with win 7 Home Premium. The laptop does not have a CD/DVD drive. Since I had a software which will run only in Win XP, I tried to install Win XP over Win7. This failed miserably and I formatted the entire laptop after taking a back up of the Recovery file. Now I have installed Win XP and I do not have any drivers. Now I want to install the Win 7 from the Recovery files. It is in WIM format. When I extracted (using 7z) it is around 13.2 GB. This folder does not have a setup.exe. Has a folder structure starting with "1". Inside I have folders like "Windows", "Documents and settings", "Program Files","Users", "Drivers","Boot" etc. I have both the extract folder as well as the WIM file. I have only USB drive. Please let me know how to install Win 7 over the Win XP.
Thanks in Advance
Mike..

Read thru the Sticky at the top of the page. How to install from USB.
Joe