This refresh process blog was written by Amanda Murphy – very well written and includes screen shots.
Did you follow the steps and get errors? So have many others What complicates matters is MS VPC (Especially if you used NewSid – see Steve Clarkes WebBlog – Don’t Use NewSID!) and joining the server to a Domain.
The fix to date is to start from scratch (Tried SysPrep and didnt work)…put on a pot of coffee and rebuild your server. Use a straight forward PC running Windows 2003 SP1 running alone – not part of a domain. My end configuration is a DC with 250mb and a Moss 2007 server with 1gb or RAM (VPCs).