Are you sure about that? I thought sysprep just reset the Plug and Play database and forced Windows to do a rediscovery. I use sysprep at work for Win2k images like one of the above posters and it has reduced the amount of images we need down to 4 or 5 from the 15-20 we had before. I never looked into it resetting the user accounts.
Fairly, but to be honest I haven't used it in some time. The issue is that sysprep setsup a new sid for the machine, and thereby new local machine accounts will be generated. Not a problem if your a corporation on a domain (the domain accounts don't change), but for home use you'll lose the profiles associated with the accounts. Here is some text from Windows magazine on it:
"NT uses SIDs to learn where actions originate and to determine whether those actions have authorization. Because SIDs are the heart of NT system security, SID generators must create unique SIDs correctly. SID generators need to know when to create the SIDs. Any software you install before SysPrep generates a unique SID during the initial boot sequence will become invalid after SysPrep generates the new SID.
The reason the software becomes invalid is because of the way SID generators create SIDs. Here's what happens. When you first install NT, the setup routine generates a unique SID. The computer uses this SID as a unique prefix for all the machine's local accounts. Suppose, for example, that the SID for a system is XYZ123, and you create two new user accounts for system services to run on that system. The SIDs for those accounts are XYZ123-1000 and XYZ123-1001. When you first run SysPrep on the computer, SysPrep will change the system's SID prefix. Let's assume the new SID prefix is PEG4555. When the system services try to start using their SIDs of XYZ123-1000 and XYZ123-1001, they will fail their security authorization, because the system expects their SIDs to be PEG4555-1000 and PEG4555-1001."
Bill