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If during boot you are seeing the “Local Boot” selection and the device boots quickly into the native OS, it is not a PXE issue. This boot selection is a part of the boot floppy that WDM sends down as a result of a PXE boot.
The issue is somewhere in the WDM scheduling. WDM is responding to the boot floppy saying that there are no pending jobs for this device.
What Winterm model?
Do you happen to have a wireless card installed in this device?