If you just don't insert a DVD blank, and trigger the burning process, it will still start encoding and create the DVD folder on your hard drive (at the location specified in your program settings for disc images). Once it's done encoding and starts prompting for a disc, just abort the whole procedure.
In the "Deluxe" versions of PhotoStory 7 and 8 you can also set the burner drop-down list in the final burning dialog to "Image Recorder", which will enable you to create an ISO file once you hit the button to start the burning process.