Sysprep /oobe issue with WindowsSideShow

Windows 7 Professional, Service Pack 1, x64. Built from Volume License media that included Service Pack 1. Installed a large number of applications with intention of capturing a Thick Image for deployment using Microsoft Deployment Toolkit. I have reproduced my problem outside of the MDT environment using sysprep by itself, so this issue is not specific to MDT.

After running c:\windows\system32\sysprep\sysprep.exe /generalize /oobe /unattend:unattend.xml, I get a Fatal Error. Output from setuperr.log:

2012-02-29 13:39:46, Error SYSPRP WindowsSideShow: Failed to get task folder (0x80070003)

2012-02-29 13:39:46, Error [0x0f0082] SYSPRP LaunchDll:Failure occurred while executing 'C:\Windows\System32\AuxiliaryDisplayClassInstaller.dll,WindowsSideShow_Sysprep_Generalize', returned error code 31

2012-02-29 13:39:46, Error [0x0f0070] SYSPRP RunExternalDlls:An error occurred while running registry sysprep DLLs, halting sysprep execution. dwRet = 31

2012-02-29 13:39:46, Error [0x0f00a8] SYSPRP WinMain:Hit failure while processing sysprep generalize internal providers hr = 0x8007001f

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This appears to point to WindowsSideShow.

I've read other similar postings and tried all of the workarounds I could find. I've already reviewed and tried the following:

1) This does not appear to be related to license rearming. I am still within the grace period, and still have 2 rearms left. I have tried this with the SkipRearm setting not present in the unattend.xml, and have tried it with SkipRearm present and set to 0 and with it set to 1.

2) I have deleted all extraneous user accounts, profiles, and entries under Windows NT\ProfileList in the Registry

3) I have enabled all services that were disabled. I've tried with the Windows Media Player Streaming service enabled and with it disabled.

The only action I can take that seems to have an effect, is to prevent Sysprep from attempting to execute the AuxiliaryDisplayClassInstaller.dll, by deleting the registry value at HKLM\Software\Microsoft\Windows\CurrentVersion\Setup\Sysprep\Generalize, value {b3257dc1-2617-6667-6a6f-2fe2739a2b89}. After deleting this value, Sysprep appears to run successfully.

Is this a known issue? Is there a fix for this other than arbitrarily deleting this registry entry? I have other images that contain this entry, and they sysprep fine. Are there any negative effects to removing this registry key?

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