An error message occurs when you run "Sysprep /generalize" in Windows Vista or Windows 7: "A fatal error occurred while trying to Sysprep the machine"

When you try to run the System Preparation Tool (Sysprep) in Windows Vista or Windows 7, and you use the /generalize option, you may receive the following error message:

The Setuperr.log file may contain lines that resemble the following:
Note The Setuperr.log file is located in the \Windows\System32\Sysprep\Panther folder.

This error may occur if the Windows Software Licensing Rearm program has run more than three times in a single Windows image. 

To resolve this issue, you must rebuild the Windows image.

To work around this issue, use the <SkipRearm> setting in an XML answer file (Unattend.xml) to skip the Rearm process when you build the Windows image.

The following text is an example of an XML answer file for Windows Vista:Note

You must make sure that the <SkipRearm> setting is removed from the final unattended file that is used to deploy computers in a production environment. If <SkipRearm> is not removed from the unattended file that is used to deploy computers in a production environment, the KMS current client count does not increase for new clients that are added to the network.


The below Technet article describes skipRearm tag of Microsoft-Windows-Security-Licensing-SLC component

http://technet.microsoft.com/en-us/library/cc722350(WS.10).aspx


The following text is an example of an XML answer file for Windows 7: 

The below Technet article describes skipRearm tag of Microsoft-Windows-Security-SPP component

http://technet.microsoft.com/en-us/library/ff716103(WS.10).aspx

The Windows Software Licensing Rearm program restores the Windows system to the original licensing state. All licensing and registry data related to activation is either removed or reset. Also, any grace period timers are reset.

To run the Rearm process in Windows Vista and Windows 7, use one of the following methods:  

• Run Sysprep /generalize on the computers that are used to build the custom Windows Vista image.
• Run the Slmgr.vbs script in an elevated Command Prompt window. For example, run cscript c:\windows\system32\slmgr.vbs –rearm.

Note Administrative credentials are required to run the Rearm process. The Rearm process can be run a maximum of three times in a Windows Vista image. For more information about the System preparation Tool, visit the following link:

299840 How to use Sysprep with Windows Product Activation or Volume License Media to deploy Windows XP