I have been struggling with creating a new image lately using HIIS which uses sysprep. The image is created on VMware Workstation and I am using Windows XP SP3. The problems that I ran into are the following. The USB drivers would not install so I would have no mouse when the imaging was done, so I would have to go into safemode so they would install. Even after that if I  plugged the mouse and keyboard into a different usb port I would have to do it in safemode. Then I ran into the problem that sysprep was looking for files in the sysprep\i386 folder (which can happen if you slipstream with nlite which I did not do) so I had to put the files in my image which of course slowed the imaging process down. So I decided to sysprep step by step during the image creation which of course took a ton of time as we all know . What ended up causing my grief was having layers active during the sysprep process. I can leave the layers installed but they have to be deactivated. I then have a script change them to activate on startup after the sysprep process. I hope this helps someone else or if I'm just missing something please let me know. 
Thanks,
Ben
P.S. These are the layers installed on my image.
Adobe Reader 9.3
Google Earth 5.2
Java Client 6 Update 16
Photo Story 3
Read&Write Gold 9
Real Player Enterprise