I am not sysprepping my template. I have a base image that I shutdown and convert into a template. I deploy that template and when it is deployed the VM has a C:\sysprep folder that doesn't exist in my template. That folder has a sysprep.inf file that shows my customizations, but those customizations are not done. However, there is no sysprep file in the C:\sysprep folder. So I assume the system never could sysprep since the file was never placed there by the deployment process.

I do have the sysprep files placed in the correct directory on the vCenter Server. So the files are in place for in the WinXP, Win2003, and 1.1 directories.