Just a quick note for those experiencing the same issue. After a fresh install of an LTSP server from the Ubuntu 10.10 (Maverick Meerkat) alternate CD I was unable to connect from any of the thin clients. I kept getting a TFTP timeout (but DHCP was clearly working).
After checking all the variables mentioned in this article, I discovered that the filename for pxelinux.0 in /etc/ltsp/dhcpd.conf ended in .tmp as in:
filename "/ltsp/i386/pxelinux.0.tmp";. I don’t know if this is a bug in the installation program or what, but removing “.tmp” worked like a charm and everything is now up and running, and I’m thrilled!