Yes, the user needs to be admin on the local box. If your users are building their own boxes (which is how I read the situation), that is a non-issue.

If you are actually doing unattended installs, I saw something about that in the KB with a work-around. Try searching for "XP domain unattended".

If you want the Network Identification Wizard fixed, open a case with PSS. Seems like a valid bug to me (the wizard attempts to use the specified computer account but fails). Or post something on ntbugtraq.

-Bryce