The short answer is you can't produce a clipped sid image in ArcGIS 10, the format is proprietary. But you should be able to produce a clipped jpeg 2000 (jp2) which is similar. A typical sid compression is 20 to 1. In ArcGIS to get the equivalent compression on a jp2 you would use 5 in the Environment - Raster Storage form compression quality box. (That setting has always been counterintuitive to me. You get it by dividing 100 by 20.) You need to use jp2 as your extension in the output raster dataset and you need to select jpeg2000 in the environment -raster storage compression drop down. Uncheck build pyramids, the format does that already. If you still have trouble clipping a sid to a jp2, you might first convert the sid to jp2, then clip that. Note if your sid image is in the newest sid format (MG4) you may need to download a plugin from LizardTech to handle it.