The problem here is that the WDS Capture Image (6.0.6002) we had been using for XP, Vista and Server 2008 (I think) does not appear to work with Windows 7 (6.1.7600). Also to mention the SATA/RAID/NIC drivers for the T1650 for WinPE are not easy to locate on Dell's website as they are not in the usual driver download list.
I didn't take the time to step through each scenario and try to test whether or not I could get the 6.0.6002 capture image to grab a sysprepped Win7 installation, all I know is that it did not work the first time I tried, so I went forward with using a 6.1.7601 capture image with the correct SATA/RAID/NIC drivers.
First, the drivers need to be located. Normally on the Dell Support site, by entering the service tag you get a list of drivers for that system by category. In that list is the SATA/RAID section. In this case, the drivers are bundled in a .CAB file under the "WinPE 3.0 Driver Cab Pack" You need these so WinPE can read the hard drive when the controller is in RAID mode (which it is by default on the T1650, although not configured in a RAID array unless done by the factory.) This file set includes a driver pack readme which details the folder structure and the associated drivers. The Serial ATA 54R22_A00-00 and Intel 825xx NIC 615P2_A00-00 drivers were needed in our configuration so I extracted the folders from the .CAB file and added them to the WDS Console's drivers section and gave them a grouping.
Next, I needed to create the capture WIM from the Windows 7 boot.wim (Win 7 media folder - sources\boot.wim) using the WDS Console. Right click in the boot section and select Add Boot Image. Choose boot.wim and add the description to "Source WIM" or something. When it's finished being added, right click on it and choose Create Capture Image. Name this Win7 Capture Image" or something appropriate. When that's done, right click on it again and choose Add Driver Package to Image. Click Search, then select the RAID/NIC drivers and finish the Wizard. Now, when you PXE (or USB) boot you can select your Win7 Capture image and hopefully read the sysprepped disk.