Note: It was a blessing and a curse. He was a Windows XP holdover despite security issues and his preference for security. He wouldn't transition. The reason? He invested too much time into his XP box to give it up. Plus, looking at the Win7 default install, he figured it would be less fun next time.
For this reason, I thought about using Windows Embedded as it has configuration tools to strip out most unnecessary things while being compatible with whatever you want. That plus stripping guides. Alternatively, stick with tommy's stripping-style method. Either way, you eventually have a set of files you turn into an image with proprietary or open tools along with configuration scripts to make it unique. That has many advantages in addition to size in terms of administration, backup, and even security.