well, I did some more fiddling, and here is what I have come up with. I took out all of the variables by removing the video card some usb devices and the PCI NIC that I was using. I try to boot from the NIC on the mobo and I got a kernel panic. So i did some research on this NIC and found a link on how to get it to PXE boot. The only problem is the link sets you up to PXE boot off of a linux server, not LMCE. I am wondering if the method would be the same or different, here are the links if anyone feels like telling me whats what.
Well, for those who might be interested, I have found the solution, which is compile the driver into the ltsp chroot and re-build the initramfs; have used some of the instructions provided on:https://help.ubuntu.com/community/HowToSetupLTSPDevelEnvironment
For complete instructions on how-to build the driver in general (for those interested in driver for Intel 82562v-2 NIC installed on Dell Vostro 200 and maybe other HW) :http://ubuntuforums.org/showthread.php?t=551720
I would just boot from the add on NIC but for some reason the PC will only go into PXE boot if the onboard NIC is the one connected, I can swap the cable once it starts to boot, but I feel like that might be part of the original problem.