Hello. I am not sure what Save a copy of your current configuration on the ISO does. Which configuration is it speaking about? Those you chose (reg tweaks etc)? Or does it save some windows settings? The mentioned setting can be seen here (third screenshot from the top)

Also, when I login the first time windows claims it needs Win CD because an important system file was overwritten. I assume this is a result of nLite applying chosen settings & tweaks. If that indeed is the case, how can I be sure some windows update (or whatever) won't just "repair" the file at first opportunity?

Save a copy etc. does just that - it saves a copy of your nLite settings on the CD you create. The advantage of that is that should you wish to create a new CD later on you can load up the configuration details from the CD you originally made without trying to remember all the settings you made. It has nothing to do with any Windows configuration as such, though one obviously affects the other.

The second question - you need to disable Windows file protection to avoid this issue. There is a small application that can toggle WFP on or off on an existing install which is probably your best bet now rather than start all over again. A search on the forum should find the utility.

Ahh, that makes sense. Thanks.

Regarding WFP, wouldn't disabling it massively increased the chance of Windows to be even less stable? Now that you brought up WFP, there is an option in nLite which skips "cataloging files". If I understand correctly removing catalog files would make Windows Update believe there was no (windows) updates intergrated into the CD installation and would therefore offer them all over again?