I managed to screw up the partitioning while installing Kubuntu on my new X230. Now, the whole W7 partition is gone. The recovery partition is still intact, and as I would like a small W7 partition I'm wondering if its possible to create the recovery stuff on the USB through Kubuntu. If not, what are my other options?

You mean you are trying to "burn the recovery discs" (so to speak) to the USB drive, and to do this from within Kubuntu?

Other options:

1)  back up everything you have in Kubuntu onto an external drive, then use the recovery partition to reinstall Windows 7, then reinstall Kubuntu and copy your stuff back.  I have done something very similar a few times.  Windows 7 wants to use the whole drive (or partition), but I recommend a solid backup to be safe!  When you reinstall Kubuntu, you can adjust partition sizes.

2) order factory recovery discs, then restore.  But, you will likely face the situation as above.  Be sure to have backups!

3) possibly some 3rd alternative... use an external drive, use factory recovery to restore to external drive (if possible), then burn recovery discs to USB drive?  Not sure if this will work.  Be sure to back up first, in any case!

To avoid similar situations, I would recommend burning the recovery discs (to USB) as soon as you get it running again.  I was able to burn to a 16gb drive; it was something like 13GB.

-JV474