Works fine except it won't store ISO files

well from what i have observed from the images is that you are using the FAT32 file system and FAT32 is designed in such a way that the maximum allowed file size (size of a single file) on a FAT32 based file system is at most 4 G and whenever u try to copy a file of size more than 4 G, you get a "Disk Full" error. This is pretty normal.
So, it would be better that the next time you think of re-installing windows, make sure you format the drive(s) using the NTFS file system so that you wont face the error again.

Workaround: You can split them up into parts of an archive of 100 MB size so that they can be copied onto the external drive without any problems. (use WinRAR)

Extract the ISO file,put stuff into a normal folder and delete the old ISO image file. Copy and paste the bunch files you got from the ISO file, into your hard drive.I just did this and it worked.hope this helps.