I found a few places where other people have mentioned a supposed 3-sysprep limit, but no authoritative source that agrees with a simple limit. There does, however, seem to be a 3-time limit on resetting the activation clock: http://support.microsoft.com/kb/929828 says a fatal error will happen if the Licensing Rearm program runs more than three times, but this can be skipped if you don't need to reset the licensing / registration / activation settings.