This little issues is driving me crazy, I have search the internet to no 
prevail.  Everything appeared fine until I added an admin user in chroot and 
did a ltsp-upgrade-image then this error started.
I moved /opt/ltsp/i386 to /opt/ltsp/i386-ORIG and i did a sudo 
ltsp-build-client --arch i386 after that finished, still dropped to busybox 
shell, then I did sudo service nbd-server restart, tried booting the thin 
client and the same thing happened, then I tried 
(cat <<EOF
ipappend 3
EOF
) | sudo tee -a /var/lib/tftpboot/ltsp/i386/pxelinux.cfg/default
and that did the trick.

I really want someone to explain to me what the chroot is for?  If it is
only supplying the boot image why would we ever chroot in to that
environment and do an apt-get update, then rebuild the image?  I am just
going to note in my blog about my install to never (at the moment) go
into your chroot environment.  I swear there was a lot more
documentation out there on setting up the LTSP-server, I know at one
point I was able to have the pxe-boot menu automatically select the arch
during boot.  Maybe this is just my little rant for finding it
impossible to "fix" this problem for the past 6-1/2 hours.  I am going
to attempt to break things again and see if just adding that code above
does the trick.

Thanks for giving me a jumping point guys!!

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

Title:
  i386: Client drops into BusyBox

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