As mentioned in a previous blog article, the Windows Embedded Standard 2011 “Quebec” toolset is broken up into two main components: Image Configuration Editor (ICE) and Image Builder Wizard (IBW). ICE is the equivalent of your Target Designer experience in Windows Embedded Standard 2009. IBW is a new development experience that is designed to be extremely simple. With IBW, you can quickly and easily create an embedded OS for your device. With ICE, the development experience is slightly more time consuming, but you have the full flexibility to customize the OS to your heart’s content.

IBW is essentially a wizard that runs on your target device. If you’ve downloaded or gotten a physical copy of Windows Embedded Standard 2011, you’ll find two disks (or ISOs) that contain IBW (one for x86 and one for amd64).

You’ve got a few options for how to use IBW to build an image:

• Boot from DVD

Stick the appropriate disk into your device (or burn the ISO to a DVD), and restart the device. Your device should boot directly into IBW (you may have to hit “any key” at some point or configure your BIOS to boot from DVD).

• Use Virtual PC and boot from ISO

Virtual PC is a handy (and free!) application that lets you run an OS on top of another OS. You can download Virtual PC here. Once you have it installed, you can click the New… button to create a new Virtual Machine (VM). Once you have one created, select your VM and click the Start button. You’ll see a new window with some BIOS text. On this, click CD then Capture ISO Image…. Now, find your Quebec x86 IBW ISO and click Open. Your VM should now boot directly into IBW.

• Boot from USB

If your target device doesn’t have a DVD drive, it’s also possible to boot IBW from a USB drive (as long as your device supports booting from USB). Here’s how to make your USB drive bootable, and how to copy your IBW files over:

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  • Attach your USB drive to your development computer.

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      • From a Windows Vista, Windows 7, or Windows PE 2.0, 2.1 or 3.0, run the DiskPart tool by typing diskpart at a command prompt. The version of DiskPart from Windows XP doesn’t fully support formatting USB disks, so you’ll need to use diskpart from a later version of Windows or WinPE.
      • Some commands in DiskPart require you to know the disk number. From within DiskPart, type list disk to see the disks attached to your computer. Find your USB disk (you can usually tell from the size) and remember the disk number.
      • Next, type the following commands to make your USB disk bootable. Replace <disk_number> with the number of your USB disk from above.

Source: http://blogs.msdn.com/embedded/archive/2009/09/08/image-builder-wizard-quick-and-easy-embedded-os-creation-part-1.aspx