@davidjor I think things are being a bit mixed up here. Let’s step back and take the whole picture. In your initial post you said you wanted a FOG standalone setup and you thing dnsmasq could cause the issue. Let me ask, why do you use dnsmasq at all. What is providing DHCP in this scenario? Looks like an external server is doing this. What is it? Why can’t you add PXE boot options to that DHCP server?
If you can’t modify that DHCP server then dnsmasq is the right way to go. But as it can be a little tricky I first wanted to check if we really need to go that way.
Looking at the config you initially posted I see a line pxe-service=X86PC, "Boot from network", pxelinux which could be causing that we see pxelinux in the pcap file. Please make sure you only use Georges config (not a combined one) and put in your IP addresses where needed.