Additionally VMware converter also showed the following... 

 

The guest OS customization box was not ticked however it tried to run sysprep anyway and failed.

The fact it says "Error while creating Customization deploy File: error creating archive" seems to show it didnt have any details for the sysprep file (because I didnt ask for it) and failed.

Following that shortly after "Image processing task has failed with MethodFault::Exception: sysimage.fault.CustomizationSysprepFault" confirms that it was trying to run a sysprep image processing task which failed.

 

Despite all this the VM was still created, bootable and fully working so panic was over but worth knowing what happened. As to why it happened maybe the box was ticked then unticked a boolean flag wasnt cleared? Who knows wasnt worth putting a call in to VMware as otherwise it was 100% successful.

 

 

[#2] [j1] [2010-07-02 05:59:52.812 'App' 256 info] [extendedOsInfo,874] ParseNTRegistry FOUND: Microsoft Windows Server 2003 root:WINDOWS\ SrvPack:2 SMP:1 64:0 Ver:5.2
[#2] [j1] [2010-07-02 05:59:52.812 'App' 256 verbose] [disposable,122] object explicitly disposed: fileRegistry={virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},0}},WINDOWS\system32\config\SOFTWARE
[#2] [j1] [2010-07-02 05:59:52.828 'App' 256 info] [extendedOsInfo,230] Returning OS as winNetStandardGuest
[#2] [j1] [2010-07-02 06:00:00.734 'App' 660 info] [vmiCustomizeTaskWin32,912] sysprepDeployRoot:
[#2] [j1] [2010-07-02 06:00:00.734 'App' 660 info] [vmiCustomizeTaskWin32,913] sysprepOptions:
[#2] [j1] [2010-07-02 06:00:44.546 'App' 660 error] [vmiCustomizeTaskWin32,942] Error while creating Customization deploy File: error creating archive
[#2] [j1] [2010-07-02 06:00:44.546 'managedImportSource' 660 info] *** Begin Logout() ***
[#2] [j1] [2010-07-02 06:00:48.578 'managedImportSource' 660 info] *** Finish Logout() ***
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [disposable,122] object explicitly disposed: computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,114] Cleaning up computer's child objects
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,130] Unregistring volume id=virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},0}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,130] Unregistring volume id=virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},1}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,130] Unregistring volume id=virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},2}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,130] Unregistring volume id=virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},3}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,130] Unregistring volume id=virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},4}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,130] Unregistring volume id=virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},5}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,130] Unregistring volume id=virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},6}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,130] Unregistring volume id=virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},7}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,130] Unregistring volume id=virtVol={computer={990f7ffa34dae92a3d60a30f58465ee43ebfb8a3},8}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,140] Unregistring disk id=disk={bc134b6dcd10bd2f4d53e8e7f2adbede8068c5ed}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,140] Unregistring disk id=disk={689f19d5ac660fb4edbc6c4c1ce25e4d50af1869}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,140] Unregistring disk id=disk={e2ec87a2f2bf9d6875e8c24e9d765dcc2f6efbab}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,140] Unregistring disk id=disk={2f2fd3f0dca77da8f1325f04994852b199dcd903}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,140] Unregistring disk id=disk={41b8df9eb8cecf38d9ffbfec4a4fad4a8a2fbefc}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,140] Unregistring disk id=disk={1b759882cb87ca15166e43b3d795c971ab6bd313}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,140] Unregistring disk id=disk={121acd4a08c5f51b0bda1a17bb5386a1b5f8567}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,140] Unregistring disk id=disk={2debb775ec50b388e09ad8555ab02b8c5c0bf1af}
[#2] [j1] [2010-07-02 06:00:48.578 'App' 532 verbose] [diskSet,140] Unregistring disk id=disk={3489613a464383617e9ff4fb84423ad0ad1b9ec}
[#2] [j1] [2010-07-02 06:00:48.671 'App' 660 error] [imageProcessingTaskImpl,572] VmiCustomizeTask::task{17}: Image processing task has failed with MethodFault::Exception: sysimage.fault.CustomizationSysprepFault
[#2] [j1] [2010-07-02 06:00:48.671 'App' 660 verbose] [imageProcessingTaskImpl,154] VmiCustomizeTask::task{17}: SetState to error
[#2] [j1] [2010-07-02 06:00:48.703 'App' 532 verbose] [disposable,122] object explicitly disposed: VmiCustomizeTask::task{17}
[#2] [j1] [2010-07-02 06:00:48.703 'App' 532 verbose] [imageProcessingTaskImpl,123] VmiCustomizeTask::task{17} being destroyed
[#2] [j1] [2010-07-02 06:00:49.437 'App' 532 info] Stopped impersonating in session 04C8860C-5DE4-4917-942D-DC21D35C5431
[2010-07-02 06:00:49.484 'App' 532 verbose] CloseSession called for session id=04C8860C-5DE4-4917-942D-DC21D35C5431
[2010-07-02 06:00:49.484 'VmdbAdapter' 532 verbose] Removed vmdb connection /db/connection/#2/
[#3] [2010-07-02 16:07:17.296 'App' 1620 info] Impersonating user SYSTEM in session AE86C5F9-CF2A-4DB3-8079-1C22BFC0827D
[#3] [2010-07-02 16:07:17.328 'App' 1620 info] Stopped impersonating in session AE86C5F9-CF2A-4DB3-8079-1C22BFC0827D
[2010-07-02 16:07:17.359 'App' 1620 verbose] CloseSession called for session id=AE86C5F9-CF2A-4DB3-8079-1C22BFC0827D
[2010-07-02 16:07:17.359 'VmdbAdapter' 1620 verbose] Removed vmdb connection /db/connection/#3/