Normally when preparing a Windows 7 base image, I'll install it normally, update everything, remove temporary files, and then enter audit mode to take care of a few final steps. For this particular image, I decided to do everything from audit mode.
Normally after installing Service Pack 1, I remove the temporary files by running
dism /online /Cleanup-Image /spsuperseded
However, DISM quit out with
Error: 1084 This service cannot be started in Safe Mode
After checking the logs, DISM is failing while trying to create a system restore point, which does not run in audit mode.
The solution? Go into Windows System Settings -> System Protection -> Protection Settings -> Configure, and turn off System Restore. Once that's done, re-run the DISM command and it should complete normally. After that, re-enable System Restore and continue on.