How do I install MacOS Sierra DMG to Bootable USB?
Here's what you need to do, you have two options:


Use Internet Recovery to install Yosemite, like you were doing earlier, and then either upgrade to macOS Sierra via the App Store or just download the macOS Sierra upgrade to create a macOS Sierra USB Installer from. 
To create a macOS Sierra USB Installer you need a working Mac so you can download macOS Sierra from the App Store and with a blank USB stick run this command via Terminal. Make sure you first reformat the USB stick using Disk Utility to Mac OS X Extended (Journaled). Also rename the USB stick to: Untitled

Use the following command:

sudo /Applications/Install\ macOS\ Sierra.app/Contents/Resources/createinstallmedia --volume /Volumes/Untitled --applicationpath /Applications/Install\ macOS\ Sierra.app --nointeraction


Then perform a clean install using the macOS Sierra USB Installer.