SCCM OSD fails failed to set administrator password

Problem: a reference computer used for taking image captures starts failing when re-imaging it with a OSD task sequence, it hangs on the “set local admin password” step.
But when i acknowledge the error (click ok) it continues the TS and finishes properly. I don’t even have to type the new password manually or anything, just clicking OK on the error is enough.

So after the TS was done, checked out the c:\windows\setuperr.log file and it contained the following:

Warning:
Setup was unable to change the password for user account Administrator using the encrypted password apecified because of the following error:
SetLocalUserEncryptedPassword(Administrator) returned error 1325 (52d).

Looked up the error here and it reads

Unable to update the password. The value provided for the new password does not meet the length, complexity, or history requirements of the domain.

Since the computer is not domain joined at the time of capturing, it must be a local password policy thing. I think it has been set so restrictive while being a member of the domain, and this settings is maintained after disjoining from the domain.
And since the machine has been sysprepped before, the might be a problem.

So i fired up gpedit.msc locally BEFORE the next image capture task and set the password policies to 0 characters, no restrictions whatsover, not on length, complexity, or password history.

and another problem was solved :p

By the way, i never set the local admin password to before running the OSD Capture Sequence, because that step is done by the “Prepare Windows for Capture” TS step, as can be read here

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