Maybe it would be helpful for future reference about my setup. I'm using k12ltsp 2.0.2 and Gnome with a basically "stock" configuration with two nics in my server. It's a Dell PowerEdge 4600 with 4 gigs of Ram. I'm running 60 thinknics from it, no other machines. I installed the Xvesa driver that came with k12ltsp 2.0.2 and it fixed my fonts. I added Sound = Y and what module I was using in my lts.conf and everything runs but ONLY under root. The terminals go through the motions for other users, but nothing comes from the speakers.
Outgoing mail is certified Virus Free.
Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.346 / Virus Database: 194 - Release Date: 4/10/2002