FAQ#1: 
How do I create a Finderless bootable floppy disk with System 7?
(Useful for creating emergency floppies for fixing hard disks, scanning for viruses or running disk optimizers.)

 

If you haven’t done it yet, format a new 1.44 megabyte (HD) floppy disk and name it “1.44 Floppy.”

1.) 
Insert the 1.44 Floppy disk into your Macintosh. Immediately upon seeing its icon on your desktop type command+E. This will eject the disk, but keep its dimmed disk icon on your desktop. (Of course, if you're lucky enough to have two disk drives use them.)

2.)
Insert the “Install Me First” floppy disk from the Apple System 7 disk set into your  floppy drive. Depending on where you acquired the Apple System 7 disk set, this disk may also be named “Install 1.” 

3.) 
Double click on the application called “Installer” from the “Install Me First” disk:
 







This will  launch the Apple Installer application. Click ‘OK’ on the splash screen introducing the Apple Installer.

4.) 
Using the “Drive” button select the “1.44 Floppy” disk.

5.) 
Click on the “Customize” button:
 




















6.) 
Scroll down the selection list and choose “Min System for any Macintosh,” then click the “Install” button:
 




















7.) 
From there on, follow the instructions provided by the Apple Installer. There will be a lot of disk swapping (unless you had that extra disk drive.)

At the end of the process, after quitting the Apple Installer. The “1.44 Floppy” disk should look like this: