Our MultiSite setup is working 95%.

I recently found that the images folder was being created as a symbolic link, and thus sharing images between the master site and each slave site. We would actually like to have the images unique per site (master & slaves).

I updated our MultiSite template to create a copy of the images folder, instead of a symbolic link.

When I go to manage sites, i can see that I need to re-sync the slave sites due to the template changes. When I enter a slave site to edit and then save to re-sync I receive the following error message.

Error while copying data of the table '#__update_sites'. Stopped on record with data : stdClass::__set_state(array( 'update_site_id' => '1', 'name' => 'Joomla Core', 'type' => 'collection', 'location' => 'update.joomla.org/core/list.xml', 'enabled' => '1', 'last_check_timestamp' => '1392920470', 'extra_query' => '', ))
Error while copying data of the table '#__updates'. Stopped on record with data : stdClass::__set_state(array( 'update_id' => '1', 'update_site_id' => '3', 'extension_id' => '0', 'name' => 'Malay', 'description' => '', 'element' => 'pkg_ms-MY', 'type' => 'package', 'folder' => '', 'client_id' => '0', 'version' => '3.2.2.1', 'data' => '', 'detailsurl' => 'update.joomla.org/language/details3/ms-MY_details.xml', 'infourl' => '', 'extra_query' => '', ))

Are you able to direct me on how to solve this issue?

I don't know why the message is not displayed and how to make it displayed.
So only the owner of the question know the questions.

Based on the description, it seems that you have performed an update of Joomla 3.2.x from 3.2.1 to 3.2.2
In this case, Joomla have modified the DB structure between J3.2.1 and J3.2.2 that explain that you have a problem with the slave site that still use the old J3.2.1 DB structure.

You have to go in the back-end of the slave site and go in "extension manager" / Database and click on Fix button to let Joomla perform the fix of the DB structure.

Once this will be done, the DB structure will become the same as you other website (probably the master) and will let you redo the "Open/Save" in JMS slave site definition.

So you apply the extension manager / database => fix in each slave site to update their DB structure.

I have just completed thew Database fix on each slave site. I then did the Open/Save for each slave site in the definitions and that worked without error.

The only issue I see is that the re-sync icon is still showing and does not disappear after doing the Open/Save.

Any ideas why the re-sync is still showing?

The Resync Icon alerts you that you don't have the same number of tables with its "parent" site.
So use the JMS tool menu to see which table are not copied or present in the slave site and not in its parents. Something, this is due to an extension that you have removed on a parent site and not in the slave.
The tables can be saw in the JMS tool / table tabs.