I have explained on my last reply why we see the error message” A fatal error occurred while trying to Sysprep the machine”, this message appeared because:
Even though there is no limit to the number of times that the Sysprep command can run on a computer. However, the clock for Windows Product Activation begins its countdown the first time Windows starts. You can use the sysprep /generalize command to reset Windows Product Activation a maximum of three times. After the third time that you run the sysprep /generalize command, the clock can no longer be reset.
Check this Microsoft for a hint:
SkipRearm | Microsoft Learn
https://learn.microsoft.com/en-us/previous-versions/windows/it-pro/windows-8.1-and-8/ff716063(v=win.10)?redirectedfrom=MSDN
If you anticipate running the Sysprep command multiple times on a single computer, you must use the SkipRearm setting in the Microsoft-Windows-Security-Licensing-SPP component to postpone resetting the activation clock. Because you can reset the activation clock only three times, if you run the Sysprep command multiple times on a computer, you might run out of activation clock resets. We recommend that you use the SkipRearm setting if you plan on running the Sysprep command multiple times on a computer.
About your question: “the meaning of the value of the registry key GeneralizationState 3 and 7”. Sorry, there is not a Microsoft official document explains the meaning of this registry value.
In order to check if we can continue sysprep on current machine, we could run the slmgr.vbs script with /dlv parameter, you could find remaining rearm count…. for ex, 3 says you can sysprep it more 3 times.
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