The VC Service has been restarted several times since the sysprep files were placed (as well as a few reboots). I do not see any evidence that the system was customized, but I do see a sysprep folder that is sitting on the C: Drive. I would have thought if the machine was customized the sysprep folder would have been removed during the process.
I have checked the "use the virtual machine name" option in the customized specification.
In the sysprep folder there is a sysprep.inf file that shows the correct customizations, including the name I want the machine to be. But I don't see a sysprep.exe file there. I know the sysprep.exe file is on the server in the "C:\Documents and Settings\All Users\Application Data\VMware\VMware VirtualCenter\sysprep\xp". Should it not have been placed on the machine so it could run?