Solution
Newer CPU Chipsets use xHCI controller for both USB 2.0 and 3.0 ports for which Windows 7 does not have any native drivers. As a result, Windows 7 installer boots, but no devices plugged into USB ports are functional during the installation.
As a solution, we have to embed the USB drivers within the installation media. One of the many approaches for doing this could be by using the GIGABYTE imaging utility as explained here.