Never compress a system partition!
Using copy/paste to copy files from a bootable CD to an external HDD won't work to achieve a Windows installation because it doesn't make the external drive bootable.
You cannot copy the boot image from a CD by copy/paste because it's invisible. The boot image on a CD is copied only when you perform a CD-to-CD copy using burning software, or create a disc image from a master CD and burn that to another CD).
You need to install a working CD drive so you can install Windows from the CD.