I don't think you can. Are you thinking about installing linux from a usb drive? There are ways designed specially to do this, which you can find with a simple search. But the only way that you could make a usb drive run like a cd drive is to have some way to put an iso9660 format or emulator on it - and I don't think that that's possible.
On the other hand, if you are trying to do this from within an operating system and not on boot up, there are virtual cd drives which take iso files.
Easiest method is to use Rufus (available at http://rufus.akeo.ie/)!
Be sure "Create a bootable disk using: ISO Image" is checked &
click on the icon to the right to select the bootable ISO. You will
probably also have to run setup on computer boot up to put
usb first in boot priority so you can boot from usb. Rufus worked
perfectly the first time I used it & I have booted two different
computers using the usb I created with it. Best thing about
this program is no installation is required.
If you did want to put vista's iso on the USB drive it would proably be far too big. If it is Linux, you can but you have to check the MD5 Sum. I got a really good iso.usb tutorial on Wiki.answers. Hope you find this useful!