I think, only a few administrators have worked with Windows PE (Pre Environment) yet. This might change when Windows Vista finally comes out since Windows PE 2.0 is an essential component of Windows Vista Deployment Services (WDS), the replacement for Remote Installation Services (RIS).
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Windows PE 2.0 is based on Windows Vista and like its predecessor Windows PE 1.0 , it is a subset of Windows. The primary purpose of Windows PE certainly is to deploy Windows Vista, but you can also use it for troubleshooting, for example, when essential system files of a Vista installation are corrupted.
We've been using Windows PE for a while to install Windows XP using the Operating System Deployment Feature Pack of Systems Management Server 2003. All in all, we were quite content with it. Prior to that, we've been using a third party imaging solution. Instead of Windows PE, we had to work with MS DOS for bare-metal installations. The main problem with this solution was getting MS DOS network drivers for new Computers.
In my view, the biggest advantage of Windows PE over the MS DOS solution is that you can use the usual Windows network drivers. Another plus might be its capability for scripting.
Windows PE 2.0 has two new interesting features compared to Windows PE 1.0. For one, since it is based on Windows Vista, you can take advantage of its improved security features like Windows Firewall. Don't underestimate this point. If you want to get a clean installation you should be concerned about security from the very first moment of the deployment process.
The second improvement of Windows PE 2.0 is its driver injection feature. This means that you can load new drivers from removable media before or after Windows PE has been launched. As one uses Windows PE quite often on a new hardware, this feature is a real improvement.
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By the way, Windows PE 2.0 is available for all corporate Microsoft customers. You can only use Windows PE 1.0 if you have a Microsoft Software Assurance agreement.