OK, so I now have a combination of things that will successfully PXE boot a Linux qemu-kvm virtual machine with Windows DHCP services and Windows Deployment Services (WDS). I'm using the gPXE CD ISO image to PXE boot the VMs. Now the WDS PXE process works as expected.

We have our WDS/RIS server setup similar to the following wiki article on the syslinux wiki:

http://syslinux.zytor.com/wiki/index.php/PXELINUX#Deploy_Linux_from_Wind...

Here's what I did on my workstation (I'm using Fedora 11):

[UPDATE]: Read the updated article here

So VMware Server 2.x on Fedora 11 has been driving me nuts. I recently re-imaged my workstation and decided to ditch VMware Server and give Linux qemu-kvm a try since it is now the default hypervisor in Fedora and will be the standard hypervisor going forward in Red Hat Enterprise Linux (http://www.redhat.com/rhel).

We are an almost exclusively Windows shop so we use Windows DHCP servers and Windows Deployment Services (WDS/RIS) server to image all of our workstations and servers via PXE booting. If we were using an ISC dhcpd server things would probably have been a lot easier. Below I describe how I get things (partially) working.