aha I think I know why. This happened to me too lol In your Winnt.sif, you should have this under [unattended]: OemPreinstall=Yes This will tell setup that there are OEM files to be copied to the hard disk (that's the reghacks, dx9 and whatever else you've added). Add OemSkipEula=Yes as well, that'll skip the EULA that nobody reads Since you are doing it from CD, it's correct that the $oem$ folder stays in the root of the CD, and not inside the /i386 folder.