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Summary
The server is showing reboot required flag set and it should not, the server is not pending a reboot.
Question
The server is showing a reboot required flag set, but the server is not pending a reboot.
Answer
This was caused by a sysprep not cleaning up the HKLM\SYSTEM\CurrentControlSet\Control\Session Manager key SetupExecute=Setupcl.exe after itself.
Once the key Setupcl.exe is removed and reran the bs_hardware, the reboot required was cleared.