I had the same problem yesterday on a Maxdata Server. Similar problem you had, that's why I found your question.
My server started and after some time it spilled out many of those IP-Config: no response after xx secs - giving up
messages and lead to a kernel panic after about three minutes.
I spend almost a whole day on trying to solve this issue, but I couldn't find any direct solution.
The problem is that there are two DHCP calls: One at boot time (right before PXE jumps in) which works and another one at the point where our both nodes stopped booting. The second request is shorter than the first one is not answered by dnsmasq for unknown reason.
Basically you can try different approaches:
Use a different network device:
I used a real server having two physical NICs. Switching to the second networking interface immediately solved my problem.
I have to admit that I am no expert in virtual machines, but Oracle VM VirtualBox Manager enables me to install up to 4 distinct networking devices in the VM while one can even change the adapter type. Be sure to play a bit with the settings around since my setup does not allow such a thing to be tested here.
If this does not work, modify your default
config-file to explicitly use DHCP for network configuration:
label ubuntu_12.04.4-desktop-i386
kernel /ubuntu/12.04.4-desktop-i386/vmlinuz nosplash
append boot=nfs root=/dev/nfs nfsroot=192.168.0.99:/path/to/ubuntu-12.04.4-desktop-i386 initrd=/ubuntu/12.04.4-desktop-i386/initrd.lz ip=:<server-ip>::::eth0:dhcp rw live-netdev=eth0 ethdevice-timeout=10
Remember to insert <server-ip>
.
However, if those solutions do not work for you, you can switch to static IP's:
label ubuntu_12.04.4-desktop-i386
kernel /ubuntu/12.04.4-desktop-i386/vmlinuz nosplash
append boot=nfs root=/dev/nfs nfsroot=192.168.0.99:/path/to/ubuntu-12.04.4-desktop-i386 initrd=/ubuntu/12.04.4-desktop-i386/initrd.lz ip=<client-ip>:<server-ip>:<gw-ip>:<netmask>:<hostname>:<device>:static rw live-netdev=eth0 ethdevice-timeout=10
You will have to create an additional config-file for each client (PXE boot should show which files it is looking for at boot time).
Best Answer
Lubuntu has an iso that is under 700mb. I'm not sure if it has liveCD capabilities though.
PuppyLinux is a distribution designed for this kind of purpose. One of the most recent community releases (Tahrpup) uses the Ubuntu 14.04 LTS packages.