On a Windows 7 Virtual Machine (VM) the following error appears on screen after the first restart during 'sysprep' phase: "Windows could not finish configuring the system. To attempt to resume configuration, restart the computer". When you press 'OK', Windows restart but the same error appears again without any details. After some research on the Internet I found that this error message occurs with Windows 7 and Windows Server 2008 R2 operating systems if the original operating system contains a registry key that is larger than 8 kilobytes (KB). A Hotfix for this problem is available from Microsoft here and must be applied before executing the 'sysprep' command. The hotfix is already included on Windows 7 SP1 systems.
I write this article, because – in my case – I had not applied the available hotfix before "syspreping" the VM machine, but also because I discovered that the "Windows could not finish configuring the system" error can also occur in a clean install of Windows 7 OS.
How to resolve the "Windows could not finish configuring the system" error.
When the "Windows could not finish configuring the system" appears on your screen:
1. Hold down the SHIFT key and press F10 (SHIFT + F10).
2. At command prompt type: cd oobe (& press Enter)
3. Then type: msoobe (& press Enter)
4. At 'Set Up Windows' first screen, choose your Country/ Region, Time and currency & Keyboard layout settings & press Next.
5. Type a Username and a Computer Name & press Next.
6. Type a password (if you want) and press Next.
7. Accept the License Terms & Press Next.
8. Select how you want Windows to protect your computer. (e.g. "Use recommended settings")
9. Set the Time and Date settings & press Next.
10. Now wait until Windows finalizes your settings.
11. Finally Restart your computer. *
* If after pressing Restart nothing happens, then close all open windows or perform a cold Shutdown by pressing the Power key for several seconds.
Now Windows should boot normally.
You 're done!