Ah, our old friend sysprep. It’s worth knowing the “bugs” in MS Sysprep if you're using it in VirtualCenter.
Firstly, if you want your virtual machine to join a domain during the mini-installation wizard – you will need a DHCP server on your network to give the Virtual Machine an IP address. Even if you set a static IP address – all Sysprep virtual machines on first boot (to the mini-installation wizard) are DHCP client. The static IP address is applied on the second boot of the virtual machine.
Problems also surround the reset of the administrator’s password. For the reset to work within sysprep your template’s administrator account must have a blank password. Yes, that’s meeting the security challenges of 2006 isn’t it.
A Microsoft support article explains the cause and the “work around”
This was first published in January 2006