> I can confirm TrialandError's findings. I also am running virtualbox 4.1.14 
> with extension pack.
> The nbd-server, ltsp_i386.Conf file is not empty, it was created when I did 
> ltsp-build-client.

Anthony, trial-and-error's problem was an empty configuration file.
I'm not sure what your problem is.
Did you restart nbd-server after running ltsp-update-image?
Was you problem fixed, and how? Can you boot your clients now?

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https://bugs.launchpad.net/bugs/951526

Title:
  i386: Client drops into BusyBox

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