I use a Vista 32 SP1 disc from MS as a base. I use vlite to add a couple of drivers, remove some components, tweak the services, but NOT to integrate any other hotfixes or service packs. The result installs perfectly as you'd expect. However, when I start Windows Update to grab the latest hotfixes, it installs them, reboots, and gets stuck in the same loop so many people seem to be experiencing. Incidentally I did have Windows Update checked as a protected feature. I had this problem on 1.16 and 1.2b, and now still on 1.2RC.