@george1421 DUDE it worked after adding imgFormat=0 (for gzip). Thank you again!
For anyone having the same issue I ended up with this GRUB menu item:
set myfogip=10.100.71.8
set myimage=/boot/bzImage
set myinits=/boot/init.xz
set myloglevel=4
set timeout=-1
set fogimage=2018-07-17Win10-1803UEFI
set imageid=9
insmod all_video
menuentry "1. FOG Quick Image Deploy $fogimage" {
echo loading the kernel
linux $myimage loglevel=$myloglevel initrd=init.xz root=/dev/ram0 rw ramdisk_size=127000 keymap= web=$myfogip/fog/ storage=$myfogip:/images/ storageip=$myfogip boottype=usb consoleblank=0 rootfstype=ext4 imgPartitionType=all chkdsk=0 capone=1 type=down imgid=$imageid img=$fogimage imgFormat=0 imgType=n osid=9
echo loading the virtual hard drive
initrd $myinits
echo booting kernel...
}