Since upgrading to Virtual Center 2.5 and ESX Server 3.5, I have been having problems cloning Windows 2003 VMs. The cloning process itself succeeds, I power on the VM, sysprep runs, the guest reboots, and then Windows throws the following error.
An error has been encountered that prevents Setup from continuing.
Windows is unable to start because the registry could not be updated. To address this problem, please contact your computer manufacturer. Windows must now Shut Down.
A quick Google search indicates that this problem is a result of a sysprep incompatibility between Windows service pack versions, so I copied over the sysprep files from SP2 to C:\Documents and Settings\All Users\Application Data\VMware\VMware VirtualCenter\sysprep\svr2003.
I followed the steps in this article:
It looks like sysprep is still not working during the customization phase, but at least I can get the clone to boot and run sysprep manually.