This is the process when executing a Sysprep and Capture Task Sequence in MDT 2010 (capturing a Windows 7 OS).

1. The Unattend.xml file belonging to the Sysprep and Capture Task Sequence is copied from the Deployment Share to C:\MININT.
    
2. The C:\MININT\Unattend.xml is updated with  the rules/settings in MDT by the Configure action in the Task Sequence.
    
3. The Updated C:\MININT\Unattend.xml file is copied to C:\Windows\System32\Sysprep
    
4. Sysprep is executed with the /quiet /generalize /oobe /quit switches. 
    
5. Sysprep starts searching for unattend.xml files and will find the C:\Windows\System32\Sysprep\Unattend.xml file and use settings from the pass Generalize in it.
   
   Note: If there are other Unattend.xml files on the drive, sysprep might end up using another answer file than the one in C:\Windows\System32\Sysprep. For example if there is an existing Unattend.xml file in C:\Windows\Panther, this location will have higher precedence than C:\Windows\System32\Sysprep. Info on the Implicit answer file search order can be found here... http://technet.microsoft.com/en-us/library/cc749415(WS.10).aspx. If you think that the "wrong" answer file was used, you can review C:\Windows\System32\Sysprep\Panther\SetupAct.log and verify.