I was able to get this to work successfully with a few modifications.

Instead of installing dhcp (or dnsmasq) on the server I was able to use my router because it’s running DD-WRT.
Under the Services tab:
Enable DNSMasq (if it is not already enabled).
In the options box, enter:
dhcp-boot=pxelinux.0,[TFTP-HOST-NAME],[TFTP-SERVER-IP]

Replace [TFTP-HOST-NAME],[TFTP-SERVER-IP] with the actual values for your PXE server. In my case, the line looked like:
dhcp-boot=pxelinux.0,hermes,192.168.1.101

At this point, I was able to find the PXE server during boot up but I was getting an error during the PXE boot about Forbidden directory.
From what I could find online, this is a bug in tftpd-hpa. Everything says that using the -s (–secure) option will fix it, but even with the -s option in the tftpd-hpa configuration, I was still getting this error.

To work around this, I installed xinetd and made these changes:

For the tftpd-hpa configuration in /etc/default/tftpd-hpa:
RUN_DAEMON = “no”

I then created a xinet conf file for tftp (/etc/xinetd.d/tftp) containing:
service tftp
{
protocol = udf
port = 69
socket_type = dgram
wait = yes
user = root
server = /usr/sbin/in.tftpd
server_args = -s -m /var/lib/tftpboot/tftpd.remap -vvv /var/lib/tftpboot
disable = no
}

Now to restart xinet:
sudo /etc/init.d/xinetd restart

What’s happening here is that instead of running tftp in stand-alone mode, I have xinet start it when needed.
One other note, I found that I needed to make sure the /var/lib/tftpboot dir (and all child dirs) had a+r permissions:
sudo chmod -R a+r /var/lib/tftpboot

Hopefully this will help others (and prevent bruised foreheads due to keyboard impacts).

You have to be carefull because tokens are (at least) langage dependent. For example, in French versions the GUID is the 2nd and not the 3th token. you have to modify the script or the following bcdedit commands will fail.

There is also something strange with the mounted image… I can’t see any commit after all modifications have been done…

This error is normally displayed, when you run the command directly from command line instead within a script. To run the command directly you will have to use ‘%i’ instead of ‘%%i’.  

thanks Skaven! I was indeed running the commands from the shell. I will retry later today. Thanks again!

%%i was unexpected at this time”. Any ideas?

This error is normally displayed, when you run the command directly from command line instead within a script. To run the command directly you will have to use ‘%i’ instead of ‘%%i’.

for /f “Tokens=3″ %%i in (‘bcdedit /store %BCDStore% /create /d “Windows 7 Install Image” /application osloader’) do set GUID=%%i

It gives me “%%i was unexpected at this time”. Any ideas?