The difference between install.esd and install.wim is that the ESD file is compressed and encrypted. This is done, primarily, so that the Windows installation media can still fit on a DVD or 4GB USB thumb drive. Because of the file size, it also easier to push through Windows Update.
The best way that I can think of, without extensive command line editing, would be to download
NTLite. This is a freeware utility. Open the install.esd and double click on it to extract it. Use the "Convert" button to create install.wim. Do not do anything else. This will allow you to generate the install.wim in order to use DISM to conduct repairs.