Were you running a WDS server before for your XP images?
We just upgraded our WDS server to the latest version and stuck a Win 7 image on it and it auto-joins the domain.
The details are a little sketchy at the moment because of St. Patrick's yesterday
and I haven't uploaded an image in a while but I believe we just setup a machine that is close to what we want, sysprep it, and use a capture image on the WDS server to capture it. There's an answer file to modify as well.