Question : Chaning a PC name change the SID

If you change a PC's name, (even if it isnt attached to a Domain), does it generate a new SID.  i.e If we change a PC in a workgroup from PC1 to PC2 ?

Answer : Chaning a PC name change the SID

Northumberland,
you are completely correct (including the sequence--running SysPrep *after* the image has been cloned to another machine is incorrect, too), and the cloning/renaming used is as incorrect as can be.
There is exactly one single way supported by Microsoft to clone Windows installations, and that is the use of SysPrep the way you described it. NewSid is fine for test installations, but I wouldn't use it in a production environment; who knows when and if you might need Microsoft's support after all.
The Microsoft Policy Concerning Disk Duplication of Windows XP Installations
http://support.microsoft.com/?kbid=314828