I recently created a new VM template for Windows Server 2025 Datacenter using VMWare. After completing the setup, I ran sysprep, selected OOBE from the options, checked the generalize box, and chose to shut down the VM. However, when I deployed the template to a new VM, I found that a local admin password was still set. I tried running sysprep again but this time with the reboot option, but the local admin password remained unchanged. Has Microsoft altered how sysprep operates in Server 2025?
I've checked the setupact.log in C:windowssystem32syspreppanther but didn't see any obvious failures. I'm curious about the return codes under the shsetup setup – is a code of 2 a failure and 0 a success? Also, I noticed that within the SYSPRP ActionPlatform log, the WINRE_Generalize action was successful. Does that indicate that everything is functioning correctly? However, I am seeing four errors in the setuperr.log related to BCD operations. Can anyone provide insights or experiences with similar issues?
2 Answers
I always use an XML configuration file for sysprep, and from my experience, it works correctly in Server 2025. Maybe consider trying that approach for better results!
It sounds like you might still have audit mode selected. Double-check to ensure you're doing the OOBE from the GUI. If it’s still not working, you could try running sysprep directly from the command line with the appropriate switches to see if that changes anything.

I'll definitely give that a shot. I’ll run it again from the command line and see if I get different results.