Before deploying a Azure VM Role, we need to perform

%windir%\system32\sysprep\sysprep.exe /generalize /oobe /shutdown

But in my case the sysprep fails with the log file %windir%\system32\sysprep\Panther\setuperr.txt saying:

2012-07-05 08:03:57, Error      [0x0f0073] SYSPRP RunExternalDlls:Not running DLLs; either the machine is in an invalid state or we couldn't update the recorded state, dwRet = 31
2012-07-05 08:03:57, Error      [0x0f00ae] SYSPRP WinMain:Hit failure while processing sysprep cleanup external providers; hr = 0x8007001f

I do not always want to create a new image. Is there any work around? I followed the instructions in MS support here and tried:

%windir%\system32\sysprep\sysprep.exe /generalize /oobe /shutdown /unattend:.\unattend.xml

It did not work.

Under certain circumstances, I need to tear down the VM Image from azure and re-deploy with some more changes. So sysprep has to run almost twice every week.