DHCPDISCOVER Ignored by Server?

[Jiann-Ming Su]

I'm running dhcpd 3.0.5 (old, I know), but we just observed a weird behavior.  A Windows XP device's DHCPDISCOVERs are being completely ignored by our dhcp server.  No offers are sent in response.  I did a quick packet capture, and the only obvious thing I see is option 50 is requesting the self assigned 169.254.x.y address.  Seems like this shouldn't matter at all.  Is there a known bug with the old 3.0.5 dhcpd, or is there another reason the server is simply not responding to those discovers?