Install “wimtools” so we can use wimsplit as the .wim file is usually too big for FAT32

Extract .iso

7z x Win10_21H1_English_x64.iso -owin10

Split install.wim (in 3GB parts, as it is enough to just get two parts )

cd win10/sources
win10/sources$ wimsplit install.wim install.swm 3000
Writing "install.swm" (part 1 of 2): 0 MiB of 4654 MiB (0%) written
Writing "install2.swm" (part 2 of 2): 2737 MiB of 4654 MiB (58%) written
Finished writing split WIM part 2 of 2

Remove install.wim

rm install.wim

Create partition table and filesystem

parted -s /dev/sde -- mklabel gpt
parted -s /dev/sde -- mkpart WIN10_EN fat32 1MiB -1
parted -s /dev/sde -- toggle 1 esp
mkfs.fat -n WIN10_EN /dev/sde1

Mount USB stick and copy files

mount /dev/sde1 /mnt
cd ..
cp --preserve=mode,timestamps -Rv * /mnt/
umount /mnt

Due to the fact that install.wim is now split we need to launch Setup.exe manually.

Split a Windows image file

Choose “Repair your computer” and then start the “Command Prompt”.

Then find the drive that matches the USB stick (not X: as it is some runtime environment not the actual USB stick)

c:\setup.exe /installfrom:"C:\sources\install.swm"

Install Windows using some virtualization tool (I tested using Virtualbox as it has VHD support builtin).
Make sure you boot it fully after installation to make sure everything is installed.

Install Ventoy to USB drive.
Then reformat the “Ventoy” partition in NTFS (needed for support to boot VHD files).
Install the VHDISO plugin to Ventoy by copying ventoy_vhdboot.img to a folder named “ventoy”.
See instructions here https://www.ventoy.net/en/plugin_vhdboot.html
Copy the VHD image from the newly installed windows to the “ventoy” NTFS formatted partition.

Done.