I worked at a place last year that had a very small image for Windows XP re-builds. It was two Norton GHO files, totalling about 2-3 GB. This is how it worked:

1. Boot into Norton Ghost
2. Map to the network share where the images lived
3. Apply the image to the workstation
4. Reboot
5. It would then load into Windows Setup
6. Enter the Domain Admin credentials so it can join the domain
7. That's it... it would then reboot into Windows and the image was complete.

How did they make an image so small? Did they perhaps kick off a Windows install and create an image then? I particularly liked how it required no user input other than a domain admin login.