According to the official Citrix XenServer 5.0 release notes which can be found here http://support.citrix.com/article/CTX118451 “Support for PXE servers such as Altiris and Windows Deployment Services (WDS) has been improved”
Citrix XenServer 5.0 does support PXE booting, in fact things like Citrix Provisioning Server depend on PXE booting. The issue is that technologies like Citrix Provisioning Server make use of DHCP options 066 and 067. These options respectively tell the client the address of the TFTP server and which image file should be used to boot from.
While I can’t speak for Altiris or Windows Deployment Services I can say that even as of Citrix XenServer 5.0 support automated operating system deployment technologies is limited. Several of these automated operating system deployment technologies make use of DHCP options other than the traditional 066 and 067 used by PXE booting. In fact one some of the more common DHCP options that appear to be unsupported by Citrix XenServer 5.0 are DHCP options 043 and 060. More specifically they do not appear to be supported by the Etherboot project which is the component behind the networking booting found within Citrix XenServer 5.0.
I was unable to obtain a comprehensive listing of what DHCP options are in fact supported by Citrix XenServer 5.0 and/or the Etherboot project so I would be very interested to find out if anyone has any insights.
There are many posts lingering around the Citrix support forums on this exact thing: