Yes, you can use a DVD. The reason you are not finding an ISO is because you are clicking next instead of Make ISO. See image...
Edit your first post and remove the last session u.ini. It contains your CD key and if you would have read it, it says not to post it on the net.
EDIT: Why don't you add updates? Your CD will be secure out of the box and you won't have to spend hours on Windows Updates.
Simply go to my site, http://xdot.tk/updates.html
, download the UDC script. Extract it. Run the script. You should now have a folder with all the updates up to today. Add them to the Hotfix, Add-ons and Update Packs section of nLite. Sort them by date ascending and you're done.
EDIT #2: Why is your CD so big? Are you making multiple runs or perhaps doing it on your desktop?
Edited by -X-, 10 March 2013 - 06:59 AM.