First of all, thanks Brink for the great tutorial.
Well, to confirm all the questions being raised in this thread, here are my points:
1. I slip-streamed Windows 7 SP1 x86 downloaded from Microsoft into untouched Windows 7 Ultimate build 7600 x86 using RTLite x64 on a 64bit machine. It took good amount of time for the process but it succeeded without any errors. Original ISO size: 2.34GB; new ISO size: 2.70GB (means SP backup was not cleared and put into the ISO).
2. Used this ISO to burn a DVD and clean-installed using it. Tried Option 1&2 of this tutorial, didn't work. Disk cleanup shows 530MB of files ready for cleaning but never cleans it. Also, under "View updates" and "Update" history in CP, NOTHING is shown, means this is a true slip-streamed version, just with the backup files, which are totally useless in this case since you can't remove SP1 coz it's truly integrated.
3. Now did what has been explained in option 3. Worked like a charm. It took around 5 minutes there.
4. After restart, Windows started "Configuring updates" and "Cleaning up" before log on. This took around 10 minutes.
5. Now checked the space; gained around 900 MB of space. Good.
6. Disk cleanup still show the SP backup entry but now, its size is zero bytes. This entry can only be manually removed through registry. Google for that, I did.
Thanks and I would be glad if my post answers someone's questions.
Well, I think I was too late, LOL. It's 2013!