In version 4.0 LTSP, the ltsp-4.iso file, the getltspcfg program returned
inaccurate values when parsing lts.conf, with a '#' prepending the correct
value.  I discovered that when removing the comments from the header of the
file, the problem disappeared.

i.e. the file:
#
# Comments
#

[default]
  SERVER = 192.168.0.1
  ...

  #COMMENTED_OUT_KEYS = VALUE
EOF

This config file would return #192.168.0.1 as the value.

However, the file:
[default]
  SERVER = 192.168.0.1

  #COMMENTED_OUT_KEYS = VALUE
EOF

would return the 192.168.0.1 as the value, and the thin client boots normally.

I installed LTSP-4.0 onto a RH Advanced Server 3 system.