“A fatal error occurred while trying to sysprep the machine” error – Fix

Windows has a limitation of only allowing a machine to be sysprepped 3 times until you have to redeploy the operating system clean. I have spent a greater part of the past few years creating images, so I have run into this multiple times. After some research and testing, I have found that they below steps will work in a pinch.

To verify that this is indeed your problem, open a command prompt and type “slmgr /dlv” without the quotes. Look for “Remaining Windows rearm count”. If it says “0″, then follow the steps below.

1) Inside the Sysprep Unattend.xml file located at c:\windows\system32\sysprep, delete skiprearm=1 from the section. In order to edit the Unattend.xml file, you will need to slave the HDD onto a working machine in order to have access to a text editor for editing the file.

2) Under HKEY_LOCAL_MACHINE\SYSTEM\Setup\Status\SysprepStatus\, set GeneralizationState to 7

3) From an administrative command prompt, type the following
msdtc -uninstall
msdtc -install

4) Under HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\SoftwareProtectionPlatform\, change SkipRearm to 1

5) disconnect the ethernet cable

6) Rerun the sysprep

You should no longer receive this error.