Thanks to Andy's help I was able to get my LTSP setup running. Now I have a few questions.
1. On Ubuntu's LTSP setup, it was necessary to update the chroot. Is that needed in the Centos/Scientific Linux setup? There was a nice setup guide for Ubuntu (https://help.ubuntu.com/community/UbuntuLTSP/UpdatingChroot) which contained the basic idea. I thought about just doing this manually already, but then was worried about copying /etc/yum.repos.d -> /opt/ltsp/i386/etc/yum.repos.d because the LTSP image is running scientific linux and my repos would be CentOS?
2. When users log in (on the thin client) they are presented with the following prompt: "Authentication is required to set the network proxy used for downloading packages" Any ideas on removing this?