WdsClient: There was a problem initializing WDS mode

Hi

I am testing WDS in Virtual PC 2007. In my lab setup I have a Domain
Controller and a WDS Server. Both machines have local only NIC's.

I m using the default boot.wim and install.wim images.

The client PXE boot's after hitting F12 but then takes a very long time to
download and install the boot image. When it finally runs it's course I get
the error message above and no Windows Setup choices.

I have the exact same setup on Vmware which works perfectly. I am using
Virtual PC 2007 as I am working towards the 70-643 MS exam using the MS Press
book - which advises you to use VP.

Has anyone else had this problem? And if yes - how did they manage to resolve?

Would really appreciate some help.

Kind Regards

Jon.