I've used pretty much the same procedure since I started slipstreaming/integrating XP Pro.
Start with XP Pro w/SP3 CD - copied to hard drive.
[My instructions to myself include this. Looking at an XP Home CD \DOCS, \DOTNETFX, \SUPPORT, and \VALUEADD and an XP Pro CD \CMPNENTS, \DOCS, \SUPPORT, and \VALUEADD do not have to be included as a part of the source when using the RyanVM Integrator because no files/programs in these folders are updated when the Integrator is run and they simply consume space that could be used by other Addons included in the Integrator as part of its operation. (The user could always return to the source CD in the future if it was determined something here was required. Also, in \I386, the folders \LANG, \WIN9XMIG, \WIN9XUPG, and \WINNTUPG were also not effected by the Integrator and, depending on the end use of the final CD, one, two, three, or all of them could also be eliminated form the source as the Integrator was being used; thereby providing more space for additional Addons to be integrated.)
Searching Microsoft I determined that:
\LANG is required if languages other than English are to be installed.
\WIN9XMIG is required when migrating from Windows 95/98 to XP.
\WIN9XUPG contains entries for specifying an unattended install from Win98/SE/ME to XP
\WINNTUPG is required for a network upgrade to XP. (From Siginet: In the \WINNTUPG folder leave two files: NETMAP.INF and NETUPGRD.DLL to prevent an error message when attempt to install while in Windows.)
\CMPNENTS folder is required for Media Center / Tablet PC installs.]
Use RyanVM Integrator 1.6.1 beta 2.1 to slipstream updates and addons. Have the RyanVM Integrator 'call' DPs_Base.exe and wait while it does its thing. (Latest I've been using is: DPs_BASE_10111b29.exe)
After Driver Packs is run and before the .ISO is created: WINNT.SIF - delete the following three lines if you ever want to use the newly created CD to do a 'repair' install -
[Unattended]
DriverSigningPolicy=Ignore
NonDriverSigningPolicy=Ignore
Create ISO.
At no time do I use nLite to change anything. I have been doing it this way for years and am very satisfied with the outcome.