Remote Installation Services (RIS)

I cannot seem to get the RIS working correctly. When the pc tries to boot it looks for an IP address but fails. The error basically says the server cannot be found.

Here is the set up. I have one domain controller that has DNS and DHCP. I have an app server that is a member server. I authorized the app server in the AD as a DHCP server, even though it is not really. Then I added RIS to the app server. Rebooted, and ran the RISETUP.

Cannot seem to find why it is not working. I already checked DNS to ensure it is correct.

Got any suggestions?