So it seems like what is happening is when we do an OSD image, it installs the client and puts in in the database and then in the console you see it. But then when Active Directory System Discovery runs, it discovers it in Active Directory and adds another record. The old record says no client installed and the properties are greyed out. The new record, which I think the new working one is from the AD Discovery, shows as Client=Yes and the properties show a heartbeat discovery. How do I prevent this?

It's a well known issue, here you find more information about it: http://blogs.technet.com/b/configmgrteam/archive/2011/08/17/known-issue-and-workaround-duplicate-records-when-you-use-unknown-computer-support-with-active-directory-delta-discovery.aspx