When you try to deploy a new Virtual Machine from a template you receive the error ‘Failed to deploy template: Customization Failed’

VMware state that when you receive this error it is generally because the template source has an OS with unallocated space in the Windows System Disk. Their explanation is here:

http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=1007105

However, I found that the issue I had was caused by an .iso file that was mounted as the CD-ROM device in the template source.

To resolve I converted the template back to a VM, unmounted the .iso file so that no media was detected in the CD-ROM and finally converted back to a template source again.