I’m currently testing out Windows Deployment Services, and while working with sysprep on a Windows 7 Pro client machine, I got the following error:

Nothing seemed to work, till I tried the following recipe:

Open the run-menu, type in regedit and go to HKEY_LOCAL_MACHINE\SYSTEM\Setup\Status\SysprepStatus. Find GeneralizationState and set the value to 7.

Run a command prompt with administrative privileges. Type:

Open up regedit again and find HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\SoftwareProtectionPlatform. Find SkipRearm and set the value to 1.

Finally, in your current command prompt type:

Try running sysprep again now. Hopefully it should work. That’ll save you some time of frustration and hopefully you won’t go bald sooner.

Should this not work, check the sysprep-log file at C:\Windows\System32\Sysprep\Panther\setuperr.txt.