Create a Windows Server 2016 bootable USB

Ingredients:

A Windows machine running PowerShell 4.0 or later
A Windows Server 2016 ISO

1. Format the USB drive

Open a PowerShell prompt with administrative privileges (Shortcut: Win+X, then a).

PS> Get-Disk

Following which, you'll see output like the following:

Number Friendly Name              ...
------ -------------              ...
0      SAMSUNG MZVLW256HEHP-000L7 ...
1      Samsung Portable SSD T5    ...
2      SanDisk Cruzer             ...

Identify your USB device in the list and note the number. In my case, for this example, it is Disk Number 2.

PS> Clear-Disk -Number 2 -Confirm:$false

Create a new partition on the USB drive:

PS> New-Partition -DiskNumber 2 -UseMaximumSize -IsActive -AssignDriveLetter

You'll see output like the following:

PartitionNumber  DriveLetter Offset  ...
---------------  ----------- ------  ...
1                E           1048576 ...

Take note of the assigned drive letter and use Format-Volume to format it:

PS> Format-Volume -DriveLetter E -FileSystem FAT32

2. Copy setup files to USB

Mount the Windows Server 2016 ISO (in Windows Explorer you can just double-click the file, or right-click and choose Mount). Make note of the mounted ISO's drive letter. In my case, it's drive F.

PS> Set-Location F:\boot
PS> bootsect.exe /nt60 E:
PS> Copy-Item -Path F:\* -Destination E: -Recurse -Verbose

Install.wim size problems

It's very possible that the install.wim file failed to copy to the sources folder on the USB drive, so you will want to verify that it has. If it has not, then it's because the WIM file is too large for the FAT32 filesystem on the USB drive. You can run this command to split the WIM and copy it to the USB drive:

PS> dism /Split-Image /ImageFile:F:\sources\install.wim /SWMFile:E:\sources\install.swm /FileSize:4096

Once the split/copy is complete, you're all done.
Eject the USB drive and install away!