Hi:
The not booting from the DVD, I don't know why it isn't working.
Your BIOS settings look correct...Legacy enabled, secure boot disabled.
And you are selecting the Legacy DVD drive to boot from, correct?
But the W7 USB installation...I think I can help you with.
You need to run this tool to put the required USB3 into your W7 USB installation flash drive.
There is a readme link with instructions for how to use the tool. Download the applicable file for the operating system you plan to run the tool on.
https://downloadcenter.intel.com/download/25476/NUCs-Windows-7-USB-3-0-Creator-Utility
Why Windows is asking for drivers for the USB installation...
The Skylake chipset does not have native USB2 support until after you install Windows and then install the Intel chipset drivers, so the USB2 ports don't work.
The W7 installation media does not have the required USB3 drivers to continue, so the above tool takes care of that problem.
But why you can't boot from the DVD? Unfortunately, that I do not know.