I too have come across this problem.
In my instance it was caused by the customer having a second TFTP Server on his network (unknown to him!).
What was happening was that the PC where the User CD was being installed on sent out two TFTP requests, one to 192.168.42.255 (which it always does - god only knows why!) and another to the PC's subnet broadcast address(which is what it should do!). If this PC then got a response back from the customer's TFTP server (in response to the TFTP request sent out on the correct subnet broadcast address), before the in-built IP Office Manager application's TFTP server could respond, indicating that that the directory/file the PC was asking for did not exist, the User CD Installation program would stop listening out for bona fide replies and it would throw up the TFTP eror message. So sometimes I would get the error and other times not, all depended on which TFTP server answered first!
I had to run up a LAN sniffer to uncover this fault. The LAN Sniffer trace also gave a clue as to what PC the customer's TFTP Server was runningon. He never even knew that he had a TFTP service running on the rougue PC.
Hope this is of use.
Mar sin leat
endpoint
(when you get here there's no where else to go!)