using nlite 1.4 beta I was able to integrate all hotfixes and ie7 into these files: 
 
06/01/2005  12:55 PM       573,765,632 en-home-oem-sp2.iso 
05/23/2006  03:24 PM       606,691,328 en-home-rtl-sp2.iso 
05/23/2006  03:20 PM       654,419,968 en-pro-oem-sp2.iso 
05/23/2006  03:22 PM       656,840,704 en-pro-rtl-sp2.iso 
07/03/2007  01:47 PM       609,835,008 en-pro-vlk-sp2.iso 
 
Everything was successful, with no errors. Here are the results: 
 
07/03/2007  08:02 PM       609,331,200 en-home-oem-070307 drivers.iso 
07/03/2007  07:58 PM       590,092,288 en-home-oem-070307.iso 
07/03/2007  08:51 PM       638,763,008 en-home-rtl-070307 drivers.iso 
07/03/2007  08:47 PM       624,070,656 en-home-rtl-070307.iso 
07/03/2007  07:04 PM       691,038,208 en-pro-oem-070307 drivers.iso 
07/03/2007  07:00 PM       671,772,672 en-pro-oem-070307.iso 
07/03/2007  07:41 PM       693,458,944 en-pro-rtl-070307 drivers.iso 
07/03/2007  07:23 PM       674,193,408 en-pro-rtl-070307.iso 
07/03/2007  05:43 PM       730,003,456 en-pro-vlk-070307 drivers.iso 
07/03/2007  03:59 PM       624,150,528 en-pro-vlk-070307.iso 
 
 
I had a lot of trouble until I got better images. Thanks a lot nuhi. Next step is to tackle x64 xp, then vista!