Do you have a firewall in between the LTSP clients and the server? Opening up TFTP in the firewall (or local IPTables config) doesn't seem to let PXE requests through. Opening up PXE also doesn't seem to. There's some high port requests early on that need to get through.
Drop your firewall and see if it works. Also check your hosts.allow and hosts.deny files to see if the IP range of your clients is allowed to connect to bootp and TFTP.
I didn't see anything blocked on the firewall (logs) and the tftp test that was successful was on the same subnet as the LTSP server.
I am wondering if there are any peculiarities of DHCP that I might need to consider. After all, I can manually run tftp client sessions on the subnet, I just haven't tracked down where the LTSP client is trying to contact for the tftp files.
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