My Windows Install disk is the volume licensing version, and I did tick the box for mini setup, and yes my folder structure is $OEM$\$1\sysprep,
I just tried it again from scratch and wrote down what I did,
Build Windows XP SP3 from disc (Volume licensing version)
Install Drivers/software etc (Though for testing I created a new image with just drivers so it's faster to image)
Remove from Domain and restart
Extract files from deploy.cab from XP CD into a created folder C:/sysprep (I also downloaded it from the MS website but the versions are the same anyway)
run setupmgr.exe
Create new answer file
Sysprep Setup Option
Windows XP Proffessional
Fully automate the installation
Go through Setup process filling in appriopriate fields
Save to default location C:\sysprep\sysprep.inf
Copy Sysprep folder to USB pen drive (Leave on machine as well)
Run Sysprep.exe
Tick Use Mini-Setup
Shutdown Mode - Reboot
Click Factory
Machine syspreps and restarts
Log in after sysprep auto starts click "Reseal" (I don't check the mini-setup box a second time do I need to?)
Machine reboots again
PXE Boot into Capture image
Select C: Volume
Name Image
Save to local machine in created folder on C:
I don't upload the the server at this point as I had a duplication issue
WDS Captures image
Once image captured reboot machine run through welcome screen applying settings etc
Copy image saved to C: to WDS\Custom Images folder
Add Install Image to Install Image Group
Copy sysprep.inf file from pen drive taken from machine to created folder \images\imagegroup\imagename\$oem$\$1\sysprep\ (Also tried copying entire sysprep folder)
PXE machine to deploy to, select image, delete partitions etc,
Image deploys fine but after restarting get the Welcome to Windows XP screen etc as if it was just "resealed" and didn't read the answer file.